AR2010

Annual Report 2010
Manufacturing & Engineering

Profile
We contribute to a prosperous future by

leveraging technology to
create value useful to society.
We are fully committed to using our superior technologies to create value for people all
over the world, and to protecting the environment. In all the businesses we operate, our
goal is to realize more comfortable lifestyles today and prosperity into the future.
To achieve these goals, the Hitachi Zosen Group is drawing on its full potential to provide
high value-added comprehensive solutions in the fields of environmental systems,
industrial plants, machinery, process equipment, precision machinery, steel structures,
construction machinery, and marine disaster prevention systems.
Since our founding in 1881, we have been developing a range of technologies and
products based on our strengths in manufacturing and engineering. We are fully
committed to preserving the global environment for future generations, and to working
as a frontline player to build a society that harmoniously balances the needs of economic
development and environmental preservation.
The year in review
Oct.
A decision was made to expand the NOx
removal business by commencing operations
Aug. Sep.
next year at a factory run by H&N Catalyst
Manufacturing LLC. in the US
60th Anniversary of Hitachi Zosen

Technical Research Institute
A system for manufacturing

solar cell film was established
June July
2009
Integration of 10 Group
companies
Apr.
May A Hitz Dehydration System
was delivered to Hokkaido
Bioethanol Co., Ltd.
1 Hitachi Zosen Corporation

Contents
03 Financial Highlights
Construction of industrial waste 05 To Our Stakeholders

incinerators for General Ecology
Co., Ltd. was completed Announcement of
Mar. 07
the resumption of
Order received for construction
of Heat Recovery and Recycling
the dividend after Top Interview
12-year hiatus
Facility for the Nishi-Harima Chairman and President Minoru
Environment Association Furukawa discusses business
performance in fiscal year 2009,
the outlook for the coming year,
Order received for construc- achievements and issues in the
tion of a Clean Center for the medium-term management plan,
Hadano/Isehara Environmental Order received to supply 2
“Hitz Innovation II,” and the
Sanitation Association shield tunneling machines
for the Taipei Metro Company’s vision for the future.
Order received for refurbish-
Feb.
ment of Fujigatani Disposal Order received from Kyushu
Center Electric Power Co., Inc.
for seawater desalination
plant for its Genkai Nuclear
Power Plant
11 Special Feature
Hitachi Zosen technology:
2010 Creating a better future for the
Jan. earth and for people
Dec. An introduction to the technologies of the Hitachi
Zosen Group, which help enrich the global
environment and support our communities,
A decision was made to invest capital
into the expansion of a dedicated industries and lifestyles through more efficient use
facility for manufacturing casks and of energy, development of natural energy sources, a
Nov. canisters for storing and transporting

spent nuclear fuel
cleaner atmosphere, and infrastructure-building.
15 Review of Operations
Completion of Japan’s largest

15 Environmental Systems and
Industrial Plants Business
diameter (ø13.6m) earth pressure
balance shield tunneling machine 17 Machinery and
Process Equipment Business
(for use in construction of the Ohi
tunnel on the Shinagawa Route of the
Central Circular line in Tokyo)
21 Steel Structures and
Construction Machinery Business
23 Other Businesses
25 Technological Development
First unit completed after the

launch of full-fledged operations
26 Intellectual Property Activity Report
Order received for project for
at our new plant for medium-sized
marine diesel engines construction and management of 27 Corporate Governance and Compliance
Toyonaka/Itami City Clean Land
Board of Directors, Corporate Auditors
(provisional name) Recycle Center
28 and Executive Officers
Order received for project for
construction and management of 29 Tackling Environmental Issues
Matsuyama City’s Shin Nishi Clean
Center
30 Financial Section
57 Group Companies
Forward-looking statements:
This annual report contains forward-looking statements that reflect 59 Company History
judgments based on information available at the present time. Such
forecasts are thus subject to a number of risks and uncertainties, 60 Investor Information
and investors are advised that actual results may differ widely due
to various factors.
Annual Report 2010 2
Financial Highlights
Hitachi Zosen Corporation and consolidated subsidiaries.
Fiscal year starts on April 1 and ends on March 31 of the following year.
Thousands of
Millions of yen
U.S. dollars
Fiscal year 2005 2006 2007 2008 2009 2009
Operating results
Orders received ¥334,664 ¥327,439 ¥337,701 ¥253,141 ¥337,271 $3,625,000
Net sales 333,881 293,409 295,503 298,605 273,526 2,939,875
Operating income 2,766 9,919 10,826 11,678 13,557 145,712
Net income (loss) (29,057) 1,034 15,695 1,448 7,906 84,974
Cash flows
Cash flows from operating activities ¥ 16,669 ¥ (15,668) ¥ (730) ¥ 2,348 ¥ 5,508 $ 59,200
Cash flows from investing activities 12,227 799 26,970 (7,492) (12,659) (136,060)
Cash flows from financing activities 309 (17,812) (10,714) 1,169 8,755 94,099
Cash and cash equivalents at end of year 68,323 38,760 54,229 50,095 51,690 555,567
Financial position
Net assets ¥ 24,157 ¥ 68,652 ¥ 85,595 ¥ 85,843 ¥ 93,200 $1,001,719
Total assets 390,206 365,143 365,537 367,473 349,331 3,754,632
Interest-bearing debt 153,968 111,972 102,284 103,698 112,794 1,212,317
Per share data (yen, U.S. dollars)

Net income (loss)
Basic ¥ (56.54) ¥ 1.43 ¥ 19.74 ¥ 1.82 ¥ 9.95 $ 0.11
Diluted — — 18.02 1.53 8.38 0.09
Net assets 43.18 68.49 89.05 89.05 99.15 1.07
Financial indicators
Shareholders’ equity ratio (%) 6.2 14.9 19.4 19.3 22.5 —
ROIC (%) 1.6 6.7 6.8 6.8 7.6 —
Debt-equity ratio (times) 6.4 2.1 1.4 1.5 1.4 —
Hitz Innovation Hitz Innovation II

Medium-Term Management Plan FY2005–FY2007 FY2008–FY2010
Environmental Systems
and Europe Others
Industrial Plants
Other
Central and 0.4% 5.5% FY2010 target
42.2% South America
Steel Structures 12.0% 0.4%
and Net sales ¥300 billion
Construction Asia
Machinery 9.3% Operating
income ¥12 billion
11.7%
Sales by Net income ¥8 billion
Sales by
segment region
ROIC (%) Over 12%
Interest-bearing Under
Machinery and
debt ¥70 billion
Process Equipment Japan Shareholders’
34.1% 84.4% equity ratio (%) Over 30%

Orders
received Net sales
¥337.3 billion Orders received ¥273.5 billion Net sales & Export ratio
+33.2% Orders received (millions of yen)
-8.4% Net sales (millions of yen) Export ratio (%)
20.6
334,664 327,439 337,701 337,271
16.0 15.9 16.6 15.6
333,881
253,141 293,409 295,503 298,605
273,526
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
(FY) (FY)
Operating
income Net income
¥13.6 billion Operating income & Operating margin ¥7.9 billion Net income (loss) & Net income (loss) per share
+16.1% Operating income (millions of yen)
Operating margin (%) 4.9 +446.0% Net income (loss) (millions of yen)
Net income (loss) per share (yen)
15,695
3.9
3.7
3.4 19.74
13,557
11,678
10,826 7,906
9,919
9.95
1,448
0.8 1,034 1.43 1.82
2,766
(56.54)
(29,057)
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
(FY) (FY)
Total assets Interest-bearing

debt
¥349.3 billion Total assets & Shareholders’ equity ratio Interest-bearing debt & D/E ratio
-4.9% Total assets (millions of yen)
¥112.8 billion Interest-bearing debt (millions of yen)
Shareholders’ equity ratio (%) 22.5 +8.8% D/E ratio (times)
19.4 19.3 6.4

390,206
365,143 365,537 367,473
349,331
14.9
6.2
153,968 1.4 1.5 1.4

2.1
111,972 102,284 103,698 112,794
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
(FY) (FY)

To Our Stakeholders
The Hitachi Zosen Group began implementing its three-year

medium-term management plan called Hitz Innovation II in
fiscal year 2008, with the aim of becoming a highly profitable
company.
This plan encompasses the enhancement of the global
environment and the improvement of the social infrastructure
by utilizing our unique strengths in manufacturing and
engineering. It is aimed at realizing a return to profitability in
all business fields, and the resumption of dividend payments
by the end of the plan. Our fundamental policy is to establish
“Technology-Driven Hitz” as our corporate brand, and to
create a corporate culture of constant innovation.
We have worked together in implementing various
measures to improve our financial position and increase our
profitability, and, as a result, in fiscal year 2009 (ended March
31, 2010), the second year of our medium-term management
plan, we achieved growth in operating income and ordinary
income for the fifth straight year. We also realized a return to
profitability in all business fields and the resumption of dividend
payments, which were our top priorities.
Fiscal year 2010 is the final year of Hitz Innovation II. Also,
April 1, 2011 marks the 130th anniversary of the founding
of the Company. Having worked together to implement the
strategies of Hitz Innovation II, we are now aiming for dramatic
progress in our next medium-term management plan period,
beginning in fiscal year 2011.
We would like to urge our shareholders and other
stakeholders to look forward to our coming growth
and expansion, while giving us your fullest support and
encouragement.
July 2010
Minoru Furukawa, Chairman & President

Fiscal year 2009 performance report
The following is a report outlining our financial performance for fiscal year 2009 (April 1, 2009 to March 31,
2010) and progress in our medium-term management plan to our stakeholders.
The market environment and the reporting term. Sales are expected to rise year on year,
our business performance
to ¥300,000 million.
In fiscal year 2009, the economic situation remained Turning to earnings, we expect to achieve operating
extremely difficult. In the second half of the year, certain income of ¥12,000 million due to decreased profitability
areas of the economy showed signs of picking up, in the Machinery and Process Equipment segment, which
supported by economic stimulus measures. However, is still suffering the effects of the slump in private-sector
due to the sudden downturn that began in autumn 2008, capital investment. We expect to achieve ordinary income
private-sector capital investment was weak, corporate of ¥10,000 million, with net income coming in at ¥8,000
earnings declined, and the employment situation also million.
deteriorated.
Amid this situation, orders received for the fiscal
year 2009 amounted to ¥337,270 million, higher than the Progress in the Hitz Innovation II
previous term, largely due to an increase in orders received
three-year medium-term management plan
by the Environmental Systems and Industrial Plants In the second year of the Hitz Innovation II medium-term
segment. Sales amounted to ¥273,526 million, lower than management plan, operating income was slightly under
the previous term, as an increase in the Steel Structures target due to a decline in sales resulting from the global
and Construction Machinery segment was outweighed by recession, but ordinary income and net income were both
decreased sales in each of the segments other than the above target, even though we posted an extraordinary loss
Steel Structures and Construction Machinery segment. to eliminate future risks.
Operating income was ¥13,557 million, rising from Our financial position is also improving steadily, with
the previous year as a result of higher profit margins in the the equity ratio against assets rising to 22.5% as of March
Environmental Systems and Industrial Plants segment. 31, 2010.
Ordinary income also increased over the previous year to Also, we merged and integrated ten of our consolidated
¥16,067 million, partly owing to higher gains on equity- subsidiaries, mainly in the field of manufacturing, as of April
method investments. 1, 2009 to improve profitability and strengthen corporate
As an extraordinary loss, we posted a provision for the governance. The benefits in terms of orders received,
allowance for losses from lawsuits totaling ¥6,174 million, to profitability, R&D, and securing and developing human
cover future liability claims from customers following a ruling resources are already evident.
of violation of antitrust laws in Japan relating to a tender for
the construction of refuse incineration plants. As a result,
net income after deducting tax costs and minority interests Future policy
was ¥7,906 million, higher than the previous fiscal year. For our sustained growth and development, we will build
business structures that are well-balanced in terms of
operations for public demand and operations for private
Outlook for fiscal year 2010
demand, domestic business and overseas business,
With regard to the outlook for fiscal year 2010 (April 1, and new construction work and after-sales maintenance
2010 to March 31, 2011), we expect the receipt of large- services, and we will establish a solid business foundation
scale orders by the Environmental Systems and Industrial that is not influenced by market conditions. At the same
Plants segment, as well as recovery in Machinery and time, we will step up R&D activities in our core businesses.
Process Equipment segment. We have therefore set a
target for orders received of ¥360,000 million, exceeding

Top Interview
The Hitachi Zosen Group is implementing the medium-term management plan, “Hitz Innovation II” (fiscal 2008–2010),
with its focus on returning all business areas to profitability and restoring dividend payments.
With the plan now in its final year, Chairman and President Minoru Furukawa here evaluates and explains progress in
fiscal year 2009, and lays out his vision for the Group for the future.
First, I would like to address a few words to our shareholders on
Q1 How was business performance

during fiscal year 2009?
our progress in returning all business areas to profitability and
resuming dividend payments, the main goals of the medium-term
management plan Hitz Innovation II.
In fiscal year 2009, the second year of the plan, orders received
totaled ¥337.3 billion, net sales of ¥273.5 billion, operating
income of ¥13.6 billion, and net income of ¥7.9 billion. We remain
Returning all business areas dissatisfied with sales and earnings performance, but we did
succeed in increasing operating income for the fifth consecutive
to profitability and resuming year despite declining sales. The operating income margin also
dividend payments rose to 4.9%, close to the target of 5% in Hitz Innovation II. And
despite booking an extraordinary loss of ¥6.1 billion (allowance for
losses from lawsuits) relating to alleged legal violations in tendering
for the construction of refuse incineration plants, the net income of
¥7.9 billion demonstrated that the Group’s earnings capability has
been significantly strengthened.
As a result of these achievements, we were able to resume
dividend payments for the first time in the 12 years since 1997.
We paid a dividend of ¥2 per share after giving full consideration
to the level of retained earnings we need to ensure future business

development. We consider this amount still inadequate, in light of Corporation in April 2009. This was a challenging move, but, as
our failure to meet shareholders’ expectations over such a long a result, the Company has raised its profile as core entity in the
period of time. However, I would assure our shareholders that Group and taken on a stronger leadership role. We are now also
this is not a one-time payment, and that we are determined to able to benefit from economies of scale in all areas of our business
continue dividend payments from now on. in terms of allocation of corporate resources, procurement of
In fiscal year 2010, we plan to pay an annual dividend of ¥2 per materials and machinery, research and development investments,
share, as in fiscal year 2009. We aim to increase the dividend in overseas business expansion, and securing and developing
line with further improvement in earnings performance. human resources. We are now able to implement strategies and
measures more effectively on a Groupwide basis. We do not
expect to see the benefits of the business integration mentioned
above translate into higher sales at this stage, but in a few years
time, we do expect to be generating major synergies.
Q 2 How is Hitz Innovation II

progressing?
Three achievements
Q 3 What issues have you
encountered in Hitz Innovation II?
1. A stronger financial position

2. No more loss-making projects
3. Improved governance Strengthening new product
development and expanding into
Three significant achievements have already been made in the overseas markets
first two years of Hitz Innovation II. The first is steady progress in
strengthening our financial position. In previous years, the Company
sold assets to cover extraordinary losses, but at the end of fiscal
year 2009, our equity ratio against assets has risen to 22.5%, at The issues that remain are strengthening new product development
last getting back over 20%. Of course, work remains to be done, and expanding our business overseas. The Company has so far
but compared to the very low level from fiscal year 1998 to fiscal placed top priority on resuming dividend payments. By giving
year 2005, we can say we are out of the danger zone. Looking precedence to improvement of the financial position, we have
ahead, we need to further bolster our shareholders’ equity and been unable to channel adequate corporate resources into growth
reduce interest-bearing debt to be able to address the challenges investment such as research and development and expansion of
of taking on major projects such as seawater desalination plants overseas business. We undertook a top-down review and overhaul
in the Middle East. I want to see the shareholders’ equity ratio of our organization in April 2010 to execute the growth strategy.
against assets at 25% by the end of fiscal year 2010, the final year Specifically, we have done away with our traditional business
in Hitz Innovation II. demarcation based on segments and shifted to a four-pillar
Secondly, we have finally fully eliminated our “negative legacy” system of headquarters organizations as driver of future growth,
of loss-making projects through more rigorous risk management with segmentation based on similarity of business and shared
in both acceptance of orders and execution of projects. All loss- technologies. The four new headquarters are the Engineering
making orders have now been purged from our books. At the end Headquarters, the Machinery & Infrastructure Headquarters, the
of fiscal year 2009, we completed the handover of unprofitable Precision Machinery Headquarters, and the Business & Product
projects in the EPC (Engineering, Procurement and Construction) Development Headquarters, which will handle research and
business, involving refuse incineration plants, and bridge-building development.
business, which had become a source of concern. I believe we The functions and roles of each headquarters are as follows.
are now justified in regarding fiscal year 2009 as the year in which The Engineering Headquarters will strengthen its engineering
we made a decisive break with the past and set the Hitachi Zosen capabilities based on a dual structure comprising an Environmental
Group on a new course. But the real tests lie ahead, in terms of Systems & Solutions Division, and a Plant Engineering & Energy
finding a pathway to stable earnings generation. Solutions Division. The Machinery & Infrastructure Headquarters
Third, we have strengthened our governance by absorbing 10 will take on a key role in manufacturing, likewise breaking down
subsidiaries and integrating their operations into Hitachi Zosen into two discrete businesses, the Machinery Division and the

Infrastructure Division.
In these two headquarters (Engineering, and Machinery &
Infrastructure) we have combined businesses that separately
depend principally on either private or public sector demand. At the
Q 5 What can you tell us about future
growth strategy?
same time, we have enhanced their ability to adapt to a changing

economic environment by strengthening decision-making powers
at the headquarters-level, to enable more flexible responses to
demand fluctuation in both public and private sectors. By contrast,
the Precision Machinery Headquarters depends mostly on private
Net sales of ¥500 billion
sector orders, but we have positioned it as a key headquarters by fiscal year 2016
supporting the Group’s future business due to its involvement in
next-generation technologies such as the production system for
photovoltaic cells.
Under this new structure, we aim to strike out on a growth path
by strengthening capabilities on development of new products As I explained before, the Group has made a clear break with the
and expanding overseas businesses, while rigorously reducing past, and has relaunched itself. In other words, we have shifted
costs. the overall course of the ship, and our management posture from
“defense” to “offense.” Under this more aggressive course, we
have raised our target for Group’s sales for fiscal year 2016 to
¥500 billion, and set ourselves the target of becoming one of the
“¥500 billion companies.” We will continue to put earnings first,
Q 4 What are the business performance

forecasts for fiscal year 2010?
but we regard achievement of net sales of ¥500 billion as the
minimum requirement for our continued existence as a contributor
to the community.
To place the “¥500 billion enterprise” concept in a formal context,
we are creating our next three-year medium-term management
plan from fiscal year 2011, which we position as the first stage of
the six-year mid-to long-term plan (fiscal 2011–2016).
¥360 billion in orders received
and an operating profit margin
of 5% What are the key themes in the
Fiscal year 2010 will be the last year of Hitz Innovation II. Our
Q 6 drive to become a “¥500 billion
enterprise”?
targets for the year are orders received of ¥360 billion, net sales
of ¥300 billion, operating income of ¥12 billion, and net income of
¥8 billion. It will be very difficult to meet all of our initial targets set Three key themes
out in Hitz Innovation II due to the impact of the global financial
crisis. Now, with full-scale economic recovery still some way off,
1. Environment and energy
uncertainty has not yet disappeared from the external environment. 2. The aftermarket
Nonetheless, we aim to retain two targets from the original plan,
orders received of ¥360 billion and an operating profit margin
3. Overseas expansion
of 5%. In fiscal year 2009, we successfully returned all business
areas to profitability and resumed dividend payments, a major
achievement for us. We aim to continue to steadfastly pursue all There are three focuses in the “¥500 billion enterprise” plan.
our goals in Hitz Innovation II. The first is environment and energy. Establishment of a low-
carbon society through reduction of carbon dioxide emissions is
a prerequisite for the continued existence of mankind, and the
need for new technologies that can contribute to reduction of
environmental load has become more pressing. With its strengths

in renewable energies — refuse-and biomass-based power plant
and production systems for photovoltaic cells — the Company will
further focus resources on these areas, creating new businesses
Q 7 What words do you have on the 130th
anniversary of the Group’s founding?
founded on our proprietary technologies.
The second focus is the aftermarket. As Japan has developed
into a society with an aging population and a low birthrate and
budgetary pressures have grown, it has become more important
to get the most out of existing social infrastructure. The market for
public infrastructure maintenance and improvement projects such
Start of new challenges for Hitachi
as refuse incinerators, bridges and hydraulic gates is expected to Zosen Group
become as significant in scale as the market for new construction
over the coming 10 years.
Likewise, we expect an expansion of demand for after-sales
services for diesel engines and other the products systems
On April 1, 2011, the Company will celebrate the 130 anniversary
supplied by us to customers belonging to the private sector. We
of its founding. At the same time, the next medium-term
aim to win more orders from both public and private sectors.
management plan will be launched, and the Hitachi Zosen Group
Our third focus is overseas markets, which occupy a pivotal
will address new challenges. I am all the more convinced that
position within the Company’s growth strategy. If we are to achieve
we must continue to progress steadily toward the “¥500 billion
our target of ¥500 billion in net sales, we need to raise the overseas
enterprise” target, while pausing to acknowledge the significance
sales ratio to over 30%, from around 15% at the moment.
of this milestone. We cannot afford to be complacent; we must
Based on this conviction, the Company has launched initiatives
strengthen our business structure and earnings base and improve
on a number of fronts since last year. One example is the launch
our financial position, while committing ourselves to protection of
of operations of a joint-venture manufacturer of NOx removal
the global environment and consolidation of social infrastructure
catalysts in the United States. In moves to stage a full entry into the
as we go about our business activities. This will enable us to fulfill
still promising China market, we launched a technical collaboration
our social responsibility as a corporate citizen.
with a local manufacturer of shield-tunneling machines, and
I would like to assure all our stakeholders that you can look
established joint-venture manufacturers of marine diesel engines
forward to strong growth for the newly relaunched Hitachi Zosen
and deck machinery. Looking beyond China, we also plan to
Group in years ahead, and ask you for your further support and
develop markets across all of Asia including India, Vietnam and
encouragement in this endeavor.
Thailand, building out business operations from the Japanese
market.

Special Feature
Hitachi Zosen technology:
Creating a better future for the earth and for people
For the Earth and for People

The goal of the Hitachi Zosen Group is to establish a distinct profile in the
environment, energy, infrastructure and a range of other industrial sectors.
In particular, we share the worldwide consensus that establishment of a
low carbon society, with reduced CO2 emissions, is unavoidable if mankind
is to survive.
A fusing general engineering technologies drawn from the wide range
of industries in which we operate — environmental systems and industrial
plants, machinery and process equipment, precision machinery, steel
structures and construction machinery, marine and disaster prevention
systems — we innovate technologies that help enrich the global
environment and underpin communities, industries and lifestyles.
Improving Natural
energy efficiency energy
Waste-to-energy Biodiesel fuel
systems Solar power
OLEDs etc.
etc.
Fusion of general engineering technologies
Social
Air purification infrastructure
systems
Seawater
NOx removal systems desalination plants
Marine diesel engines Shield tunneling
etc. machines
etc.
Help enrich the global environment and underpin communities,

industries and lifestyles, through expertise in good-practice
manufacturing and engineering, and advanced technology

OLEDs
Reducing CO2 emissions through
energy-saving
Contributing to the commercial production
Improving of OLED displays
energy Organic light-emitting diodes (OLEDs) are increasingly being used

in televisions and other display panels, as well as in LED lighting
efficiency systems, leveraging the self-illuminating properties of organic
materials when activated by an electric current. In addition to
offering superior chromogenic properties and enabling thinner
panels, this technology cuts power consumption.
The planar evaporation source for OLED display production
systems developed by Hitachi Zosen can be used for large-
scale display substrates and can ensure efficient organic layer
Waste-to-energy
deposition, both of which have become issues for manufacturers.
systems We are also developing an electron-beam vapor-deposition
Reducing CO2 emissions by technology that enables high-speed deposition of the metal layer
deriving energy from waste on top the organic layer.
Pioneering the introduction of
waste-to-energy systems in Japan
In 1965, Hitachi Zosen introduced Japan’s first incinerator waste-
to-energy system, generating electricity by converting heat from
incineration of large volumes of refuse into steam for turbines.
Currently, 45 of the refuse incineration plants built by Hitachi
Zosen convert waste to energy, in line with the Ministry of the
Environment’s drive to promote high-efficiency waste-to-energy
systems. The total generating capacity of these plants is 260,000
kW — equivalent to the 1.2 million tons of CO2 emitted by some
220,000 households in Japan each year (as of April 1, 2010). The OLED production systems
Maishima Plant in Osaka City, built in 2001, has one of the highest
generating capacity levels in Japan, at 32,000kW.
Maishima Plant in Osaka City

Special Feature — Hitachi Zosen technology: Creating a better future for the earth and for people
Biodiesel fuel
Recycling used cooking oil to reduce
CO2 emissions
Construction in Kyoto of one of Japan’s largest
biodiesel fuel production facilities
Biodiesel fuel is based on used tempura oil, recycled after recovery
Natural energy from households, restaurants and canteens. In Kyoto, we have
built one of the largest biodiesel fuel production facilities in Japan,
with a daily output of 5,000 liters. This biodiesel is used in 160
garbage collection trucks and 93 city buses operating in Kyoto.
Solar power
Converting sunlight into electricity

Supporting the shift to film substrates for
next-generation solar batteries
Along with wind, geothermal, biomass and other natural energy

sources which do not emit CO2, solar power is gaining traction all
Continuous production system for biodiesel fuel
over the world. With our strong track record in commercializing
substrate manufacturing systems for solar batteries, Hitachi Zosen
is developing production devices for plastic film substrates, seen
as key to next-generation solar batteries.
NOx removal
systems
Preventing air pollution by SCR

NOx NOx
NOx
NOx removal systems
NOx
330 units delivered all over the world
Since the late 1960s, concern has risen over atmospheric pollution
due to emissions from fossil fuel combustion and from factories
and automobiles. Nitrogen oxides (NOx) and sulfur oxides (SOx)
also destroy wildlife habitats by polluting forests, rivers and marshy
Roll to roll continuous membrane formation equipment areas where they fall as acid rain after chemical changes they
undergo when in the atmosphere. In 1973, Hitachi Zosen started
commercially producing Selective catalytic reduction (SCR)
systems, having developed NOx removal equipment in the late
1960s. Some 330 Hitachi Zosen SCR systems have been supplied
to locations in Japan, the United States, China, South Korea,
Taiwan, Middle Eastern countries, and elsewhere.
Air purification
NOx removal catalysts Plant with SCR NOx removal systems

Seawater
desalination plants
Turning seawater into fresh water for

daily use
Supplying 4 million people around the world
Hitachi Zosen has been building desalination plants for Middle Eastern Social
countries and remote Japanese islands that suffer chronic water shortages
since 1970. The total amount of fresh water produced daily by all of the
infrastructure
plants that we have constructed throughout the world is around 1.2 million
tons — enough to meet the daily water needs of some 4 million people.
Of a global population of 6.6 billion today, 1.1 billion are unable to secure
a stable supply of drinking water. There are two desalination technologies
that turn seawater into fresh water usable in daily life: the evaporation
method, in which fresh water is produced by evaporating seawater, and
the membrane method, in which fresh water is produced by passing
seawater through a reverse osmosis membrane. Armed with both of these
technologies, Hitachi Zosen is helping to end global water shortages.
Shield tunneling
machines
Contributing to underground
infrastructure
1,200 units delivered around the world
Shield tunneling machines are essential for creation of underground

infrastructure such as subways, expressway underpasses, river
channels for flood control and other underground systems. These
Seawater desalination plant machines burrow out tunnels using slowly rotating cutters to cut
their way forward. Since 1967, when Hitachi Zosen first began
manufacturing shield tunneling machines, we have delivered
around 1,200 units around the world. One example is the railway
tunnel works for the Bosphorus Straits, with the total distance
bored by our machinery at 16,000m. We have also designed
and manufactured a shield tunneling machine that is essential for
Obayashi Corporation’s Ultra Rapid UnderPass (URUP) method,
which greatly shortens the amount of time needed to cut a tunnel.
Shield tunneling machine for the Bosphorus

Marine
engines
Preventing atmospheric pollution
by curbing NOx emissions
Japan’s first electronically controlled
engines meet the toughest standards
Shipping is a vital means of transportation that supports the
prosperity and economic activities of people around the world.
The International Maritime Organization has mandated that, in
sealane areas where air quality improvement is needed, limits
for emissions of NOx must be reduced by 80% compared with
2008 levels, from 2016. To cut NOx emissions from shipping,
we completed development of Japan’s first electronic control
marine engines in 2003. It can regulate not only NOx but also CO2
emissions more effectively than conventional mechanical marine
Electronically controlled MAN B&W type 6S50ME-C engine
engines.

Environmental Systems and Industrial Plants Business
Orders
received ¥191.3 billion
¥115.4 billion
Sales Operating income
by Segment by Segment
Sales
42.2% 40.5%
Operating
income ¥5.5 billion
Orders received (Millions of yen) Sales (Millions of yen) Operating income (Millions of yen)
191,306 5,488
143,031
125,475 120,731 115,442
3,404
100,533
2,187
2007 2008 2009 2007 2008 2009 2007 2008 2009

(FY) (FY) (FY)
*Fiscal years ended March 31 of the following year.
Main business lines
Environmental protection systems Biomass utilization / Water treatment / Soil remediation systems
• Municipal refuse heat recovery (incineration) facilities Biomass utilization systems Water treatment systems
Stoker-type incinerators • Methane fermentation system • Sludge recovery and
Hitz superstoker treatment system
Gasification and melting furnace • Biosolids Derived Fuel
systems • Water/sewage treatment
• High efficiency waste-to-energy systems system
Super waste-to-energy systems • Bioethanol dehydration
RDF power generation systems systems • Sea water electrolyzing
• High-speed raw refuse equipment
• Industrial waste treatment facilities
reduction system
• Recycling and sorting facilities
• Biodiesel fuel production Soil remediation systems
• Flue gas treatment equipment systems
• Ash treatment equipment • Biomass gasification
Environmental solutions Industrial plants

• AOM (after-sales service, operation and maintenance) business • Seawater desalination plant • NOx removal catalysts
• PFI/DBO business • Chemical and petrochemical • Sulfuric acid plants
• Remote monitoring systems plants • Pharmaceutical plants
• Oil and gas plants • Ammonia absorption
• SCR NOx removal system refrigerators
Principal • Daiki Ataka Engineering Co., Ltd. • Shikoku Environment Service Co., Ltd.
Group companies • Nichizo Tech INC. • Kashiwa Environment Technology Co., Ltd.
• SN Environment Technology Co., Ltd. • Kurashiki Environment Technology Co., Ltd.
• HEC Engineering Corporation • Ecomanage Corporation
• Hitz Environment Takamatsu Co., Ltd.

Business overview and outlook for fiscal year 2010
Environmental systems Industrial plants

With public investment in environmental systems picking up, we As a result of the rapid economic downturn which started in the
received an order from Matsuyama City, Ehime Prefecture for a second half of 2008, companies are cancelling or postponing plant
project involving construction and management of Matsuyama City’s and equipment investments.
Shin Nishi Clean Center, an order from the administrator for Against this backdrop, we received an order from Kyushu Electric
Toyonaka/Itami City Clean Land (tentative name), Osaka/Hyogo Power Co., Inc. for desalination plant for its Genkai Nuclear Power
prefectures for a project involving construction and management of Plant, and an order from Samsung Engineering Co., Ltd., Seoul,
Toyonaka/Itami City Clean Land, an order from Hadano-Isehara South Korea, for a seawater desalination plant for the United Arab
Environmental Sanitation Association, Kanagawa Prefecture to Emirates (UAE). Apart from this, with the completion of development
construct a “clean center” garbage incineration facility, and an order of the MED (Multi-effect desalination) method, in May 2010 we began
from Bekki Hayami Regional Municipal Association, Oita Prefecture constructing the out first MED plant with a desalination capacity of
for the refurbishment of Fujigatani Disposal Center. We also 1,300 tons per day at Kansai Electric Power Co. Inc.’s Takahama
completed and turned over the Higashiyodo waste incineration plant Power Station.
to the Environment Bureau of the City of Osaka and an industrial Given that the United States is tightening NOx emission
waste incinerator to General Ecology Co., Ltd., Osaka Prefecture. We regulations, with other regions such as China and the Middle East
have also received numerous orders from local governments for expected to follow suit, interest in protecting the global environment is
maintenance and inspection of municipal refuse incineration facilities, growing, and demand for NOx removal catalysts is expected to rise.
and repair work, as well as operation and management services. Consequently, we launched operations in March 2010 of the
Overseas, we received orders in China from Xiamen City, Fujian Scottsboro factory of H&N Catalyst Manufacturing LLC., a company
Province, Wuxi City, Jiangsu Province and Haikou City, Hainan based in Alabama, U.S.A. that was jointly established by Hitachi
Province to design and equip municipal waste incineration facilities, Zosen Corporation and Nichias Corp. In addition to working to
and we also finished designing and equipping waste incineration develop more advanced (NOx removal) products and increasing our
equipment for Chengdu City, Sichuan Province (already turned over). cost competitiveness, we also plan to expand sales and profits
through collaboration with engineering companies and boiler
manufacturers in the United States, China and elsewhere.
Topics
High-efficiency waste-to-energy plant constructed in Osaka
Hitachi Zosen Corporation has completed construction of the Higashiyodo Plant for the Environment Bureau of the City of Osaka. The
construction project involved replacement of three existing 1974-vintage incinerators (200 tons per day, each for a total capacity of 600
tons per day) which were in a state of deterioration. The new facility employs a wet-type exhaust gas treatment system in combination
with other elements such as a low-temperature economizer and two-stage extraction turbine. It is one of the most advanced waste-to-
energy conversion facilities of its type in Japan, with a power generation efficiency of over 20%.
▼ Higashiyodo Plant in Osaka City ▼ Seawater desalination plant

Machinery and Process Equipment Business
Orders
received ¥80.1 billion Sales Operating income
Sales ¥93.4 billion by Segment
34.1%
by Segment
53.9%
Operating
132,510
107,554 109,234
9,833
93,401 8,944
78,631 80,072 7,311
2007 2008 2009 2007 2008 2009 2007 2008 2009

(FY) (FY) (FY)
Main business lines
Precision machinery Marine diesel engines / Press machinery
• OLED production systems • Laser patterning equipment • Marine diesel engines

• Vacuum equipment • Polishing equipment • Press machines
• FPD manufacturing-related • Electrolytic compound
systems polishing equipment
Power generation facilities / New energy
Industrial machinery • Gas turbine power generation facilities

• Gas engine power generation facilities
• Food machinery
• Diesel engine power generation facilities
• Pharmaceutical machinery
• Co-generation systems
• Plastic machinery
• Wind power generation systems
• Water electrolytic hydrogen generation systems
Process equipment / Nuclear power equipment • Fuel cells
• Process equipment
Heat exchangers, pressure vessels, mixing vessels, driers
• Nuclear fuel cycling-related equipment
Transportation casks, storage casks, storage facilities
• Radioactive waste incineration and reduction facilities
Principal • V TEX Corporation • IMEX Co., Ltd.

Group companies • Ultra Finish Technology Co., Ltd. • Hitachi-Zosen Plant Techno-Service Corporation
• Hitachi Zosen Fukui Corporation

Precision machinery on the development of new technologies such as new dye-sensitized

solar cells and Roll to roll continuous membrane formation equipment.
Hit by the economic downturn that followed the bankruptcy of
We will make the utmost efforts to expand our business in these
Lehman Brothers, the precision machinery business recorded sales of
production machines in the future. With the recovery of the LCD panel
¥15.9 billion (falling ¥7.6 billion over the previous year) and operating
market, demand for polishing systems is also picking up, and we aim
income of ¥0.4 billion (a decrease of ¥0.3 billion). In the fiscal year
to achieve steady orders. In food packaging and medical machinery,
2010, business generally is recovering gradually, although some fields
we are focusing on expanding orders from producers of alcohol and
remain stagnant. In particular, the solar battery-related business and
seasoning for multi-handling filling systems, which is effective in
other businesses with potential for expansion such as the food
increasing the efficiency of production of diversified products. We are
production-line video recording system Shokureko, used to assure
also aiming to increase orders from other food industries for imaging
food safety, are generating earnings. We expect sales of ¥35.8 billion
detection and classification systems and orders from the
(an increase of ¥19.9 billion over the previous year) and operating
pharmaceutical industry for infusion bag filling systems and artificial
income of ¥2.3 billion (rising ¥1.9 billion).
kidney manufacturing systems, etc.
Plastic machinery Electronics control equipment

Since the Lehman’s failure, the market environment has remained Orders for electronics control equipment were extremely slack, as the
difficult in general, but areas related to LCD (Liquid Crystal Display) market for semiconductors and IT-related products slumped and
panels, solar power generation and lithium-ion batteries are performing private-sector capital investment languished due to the recession that
solidly, and we expect them to expand steadily in the future. In began in the autumn of 2008. Against this backdrop, we focused on
particular, demand for lithium-ion batteries is expected to rise with the image and video technology field and received many orders from
their widespread adoption in hybrid vehicles and electric cars from food companies for our new production-line video recording system
2009 in addition to their conventional application in mobile devices (Shokureko) and from railway companies for audio-visual recording
such as mobile phones, notebook computers and electric power systems. Recently, food companies have been investing in food safety
tools. The separator films used in lithium-ion batteries now have to and security and food defense (against deliberate contamination), and
meet customers’ increasingly stringent performance, safety and cost we plan to further expand sales of Shokureko. With the recovery of
requirements, and we will work to speed up the development of the market for semiconductors and IT-related products, which started
technology to satisfy these requirements and work hard to expand in the second half of the fiscal year 2009, infrastructure industries
business. overseas are buoyant, and orders for electronic boards and electronic
unit products are picking up. Accordingly, we plan to expand sales of
Systematic machinery rolling stock products.
We focus on the supply of laser patterning equipment, vacuum film-
forming devices and conveyance devices for the solar battery industry, Materials business
which is expected to show major growth in the future. In the fiscal The semiconductor industry was badly shaken by the collapse of
year 2009 we managed to achieve good results, with orders for such Lehman Brothers, and both orders received and sales of lapping
systematic machinery amounting to ¥20 billion. We are also working plates, which are one of our major products, were slack. However,
▼ Roll to roll continuous membrane formation equipment ▼ Combined shape and color imaging system for food material

since the second half of the fiscal year, there has been a continuous Process equipment
trend towards recovery and expansion in orders received is expected.
On the other hand, sales of other material products have been Orders received remained at a low level as competition increased in a
affected by the major delay in the recovery of the auto industry and shrinking market. Against this backdrop, we received orders from the
machine tool industry, meaning the outlook is unpredictable. Looking Middle East for large heat exchangers used in fertilizer plants and oil
ahead, we aim to increase sales of lapping plates to the next refineries. We also received and delivered orders from customers in
generation semiconductor market and expand our share of the Japan and overseas for process equipment used in various types of
domestic market. We will also step up our sales activities to win plants. In nuclear equipment, we received and delivered an order from
overseas contracts (especially in Asia), which are expected to grow in the U.S. for spent nuclear fuel storage canisters and orders from
the future. We are aiming to expand sales of other material products domestic power companies for solid waste transfer containers.
to the environment and energy industries. In particular, we will focus Further investments went into plant and equipment to expand the
on the new areas of wind power generation components and nuclear production capacity of spent fuel storage and transport casks and
power equipment and components. We will work to generate profits canisters at our Ariake Works. We completed the extension of a
through measures such as large reductions in manufacturing costs, a specialist factory dedicated to manufacturing these products. Total
review of our production system, and improvement of machinery production capacity of casks and canisters will be around 120 units
capacity utilization. per year (nearly twice the current capacity).
Marine diesel engines Press machines
Conditions remained difficult owing to the global recession that started Automobile manufacturers, which are our main customers in the press
last fiscal year, but our marine diesel engine business continued to machinery business, continued to face difficult conditions despite
perform strongly, largely due to increased supply of knock-down signs of significant recovery mainly in emerging nations. As a result,
production parts to our Chinese joint venture Zhongji Hitachi Zosen orders received by our press machinery business remained extremely
Diesel Engine Co., Ltd. (ZHD). Our new factory, aimed at expanding low, but began to show an upward trend fuelled by emerging nations
our domestic production capacity for marine diesel engines to 2 at the beginning of this year. In the fiscal year 2009, we manufactured
million break horsepower per annum (nearly twice the current a servo press test model and conducted verification tests to enhance
capacity) also went into full-scale operation, and turned over its first the performance of servo cushion. In April 2009, we teamed up with
marine diesel engines. an automobile manufacturer to carry out a performance evaluation of
In the future we will continue working to expand marine engine stamping dies that are used for automobile production. Our servo
business in the China market through effective utilization of our press machine was evaluated as meeting the world’s highest
Chinese joint venture ZHD. We are the only company in Japan that is standards. We are currently focusing on supplying high-speed press
a double licensee of both Wärtsilä-type and MAN B&W-type marine lines.
diesel engines. We aim to leverage our technological superiority,
which enables us to manufacture both types of electronically
controlled diesel engines, and also to speed up the development of
technologies for NOx emission compliance. We will also expand our
new menu of after-sales services to meet the needs of our customers.
▼ Wärtsilä 6RT-flex 50-B type electronically controlled engine ▼ Spent nuclear fuel storage casks

Electricity generation facilities
In the energy field, domestic market conditions remain difficult as a

result of the global recession, and in some cases plans are being
postponed or cancelled. However, since the market hit bottom in the
autumn of 2009 we have received orders from domestic power
companies for steam turbine generators. With new construction
projects also getting off the ground elsewhere, we are stepping up our
sales activities.
We will also proceed to expand operations in the China market
and focus on product diversification through the development of new
products (vegetable oil-fired biomass power plants, waste heat
recovery systems, and industrial-use solid oxide fuel cells), as well as
after-sales service and maintenance.
Topics
Expansion of production facilities for spent nuclear fuel transport and storage casks
In August 2010, we enlarged a dedicated facility within the Ariake Hitachi Zosen has been actively growing the canister and
Works in Kumamoto Prefecture for casks and canisters for cask business, for example by providing technology to Kimura
transportation and storage of spent nuclear fuel, to increase Chemical Plants Co., Ltd. (Hyogo Prefecture), and NAC
production capacity. International of the United States (Georgia) for solid neutron
Recent years have seen rising demand in Japan and abroad shielding materials used in transportation and storage containers
for canisters and casks for interim storage and transportation of for spent nuclear fuel. Looking ahead, we plan to continue to
spent nuclear fuel, amid dramatically increased interest in nuclear develop the market and expand sales of highly safe and reliable
power as a pathway to a low-carbon society. Accordingly, we products to meet rising demand for nuclear-plant casks and
have decided to double cask and canister production capacity to canisters.
around 120 units a year in fiscal year 2011, by expanding the
dedicated facility at Ariake from its current length of 80m to
200m (width: 23m).
▼ CTL reactor ▼ 18,000kN servo press

Steel Structures and Construction Machinery Business
Orders
11.7%
by Segment
3.1%
Operating
Orders received (Millions of yen) Sales (Millions of yen) Operating income (loss) (Millions of yen)
424
31,958
30,324
31,883
23,347 30,113
27,024
(1,317)
(3,698)
2007 2008 2009 2007 2008 2009 2007 2008 2009
(FY) (FY) (FY)
Main business lines
Bridges / Hydraulic gates / Marine civil engineering Construction machinery
• Bridges • Immersed tunnels • Shield tunneling machines

• Hydraulic gates • Floating structures • Tunnel boring machines
• Penstocks • Hybrid caissons
• Dam site inspection • Steel caissons
equipment Principal • Promotec Corporation
• Artificial ground
• Floating bridges Group companies
• Steel stacks
Topics
Delivery of two shield tunneling machines for the Taipei Metro
In March 2010, two 6.24m diameter mud pressure shield tunneling machines were delivered to the
Chun Yuan-Iwata Chizaki joint venture (Chun Yuan Construction Co., Ltd. of Taiwan and Sapporo-
based Iwata Chizaki Inc.) for the extension of the Tucheng Line on the Taipei Metro to the Tucheng
industrial area. Each of the two new machines will excavate a 1,529-meter section between Yongning
and Dingpu stations. The cutter bits feature a unique design (in terms of shape, materials and
configuration) that enables the machines to dig through both gravel and sandstone without requiring bit
replacement.

Steel structures Construction machinery
Despite a difficult environment characterized by increasingly fierce Domestically, the difficult environment for orders persisted amid
competition against the backdrop of the public spending review, profit sluggishness in public-sector investment. Meanwhile, overseas, we
improved significantly over the previous year because we achieved opened a base in Singapore and focused on expanding sales to
large reductions in fixed costs, largely by concentrating bridge South East Asia, Hong Kong and India to make further inroads into
construction operations at the Mukaishima Works. Also, we received emerging markets, which show an expansionary trend fuelled by
an order from the Kyushu Regional Development Bureau under the ongoing large-scale projects. As a result, we received orders from
Ministry of Land, Infrastructure and Transport (MLIT) for the North America, Taiwan and Singapore for various types of shield
construction of the upper portion of No. 1 Kitagawa River Bridge, an tunneling machines and orders received, including from domestic
order from the Kanto Regional Development Bureau for the customers, increased sharply, up 33% over the previous year. In
construction of an elevated bridge for the Bay Shore Route Japan, we turned over Japan’s largest earth pressure balance (EPB)
expressway in Negishi area (Kanagawa), and an order from the Chubu shield tunneling machine with a diameter of 13.6m, and also delivered
Regional Development Bureau for two large-scale bridge repair work various shield tunneling machines in Japan and overseas.
projects. We also continued to receive orders for construction work Moving forward, we will meet domestic demand for various types
on Japan’s largest embedded steel plate cells, which will be used to of shield tunneling machines and also work to expand operations
make Yokohama City’s Minami Honmoku Pier earthquake resistant, overseas to meet demand from infrastructure businesses in
and orders from electricity generation companies for the construction expanding emerging markets.
of steel stacks as well as for large-scale seismic retrofitting projects.
Likewise, we received and delivered orders for bridges, hydraulic
gates, marine structures, other building and structures, and steel
stacks from MLIT, as well as local authorities, expressway companies,
electricity generation companies and construction companies.
We also developed a flap gate type seawall designed for
installation on land (neoRiSe) to provide protection against high tides
and tsunamis.
We plan to generate stable earnings in steel structures business in
the future through continued efforts to ensure the safety of coastal
regions and prevent disasters, and through the expansion of bridge
maintenance operations.
▼ Steel plate cells ▼ 13.6m-diameter EPB tunneling machine

Other Businesses
Orders
12.0%
by Segment
2.5%
Operating
43,650
38,811 1,864
33,932
38,527
35,450 1,287
32,800
334
2007 2008 2009 2007 2008 2009 2007 2008 2009

(FY) (FY) (FY)
Main business lines
Marine disaster prevention systems
Marine disaster prevention systems Electronics systems / Control systems

• GPS buoy wave / Tsunami / Tide observation system
• GPS image transmission services High precision positioning information systems
• Tsunami and high tide disaster prevention stations
• Remote monitoring systems Slurry ice manufacturing systems
• Automatic gate operation and driving systems
Deck machinery
• Movable watertight boards
• GPS continuous monitoring systems Electricity power business
• Marine, disaster-prevention and environmental monitoring
systems
• Electrical discharge impulse crushing systems
Principal • Ohnami Corporation

Group companies • Nippon GPS Solutions Corporation
• Nippon GPS Data Service Corporation
• Seillac Co., Ltd.
• Slurry-21 Co., Ltd.
• Nippon Pusnes Co., Ltd.
• CASTING & FORGING Co., Ltd.

In the marine infrastructure business, we shipped GPS ocean wave

meters for Toa Corporation (original order from MLIT’s Shikoku
Topics
Regional Development Bureau) and for Toyo Construction Co., Ltd. Delivery of movable slurry
(original order from MLIT’s Tohoku Regional Development Bureau). ice manufacturing system
The Group has now manufactured and delivered a total of 12 GPS demonstration unit
wave observation systems, which enable early detection of tsunami
approaching the Japanese coast and provide information to the Japan In March 2010, Hitachi Zosen delivered a movable slurry
Meteorological Agency. ice manufacturing system for Hokkaido Needs Co., Ltd.
In a wide-area fishery development project for Kochi Prefecture, The system is a demonstration unit (movable sherbet ice
manufacturing system with snow-ice and blocks of ice)
we completed works on an order for surface floating fish-breeding
developed after Hokkaido Needs was awarded the
reef at Tosa Kuroshio fish farm No.16. By equipping floating fish-
development support grant for SMEs engaged in good-
breeding reefs with oceanographical observation systems, we are
practice manufacturing (support for trial development) by
improving the environment for marine resources and raising National Federation of Small Business Associations.
productivity levels in the fishery industry. Hitachi Zosen Group provided part of the proprietary
In food-plant operations, we won an order from Hachinohe City in expertise used in the slurry ice manufacturing system.
Aomori Prefecture for a project for seawater-based slurry ice Through our business alliance established in 2003
manufacturing equipment. We also delivered a movable slurry ice with the Canadian supplier of slurry ice manufacturing
manufacturing system for Hokkaido Needs Co., Ltd. Through its machines Sunwell Technologies Inc., Hitachi Zosen has
fishery processing facilities, the Company will continue to add value in moved onto the next generation of ice manufacturing
fishery products and help raise food safety standards in Japan. machines. We have won orders for 16 units in Japan,
mainly from fish-processing facilities and local authorities.
We also won an order from Hachinohe City in Aomori Prefecture
Backed by our track record and strong technological
for a project for seawater-based slurry ice manufacturing equipment
reputation, we have taken on technological support
for Building A of Tatehana district sorting center. The order will be
including building of key components for this system.
delivered by the end of March 2011. This facility being planned by
Hachinohe must meet Ministry of Health, Labour and Welfare-
recognized standards for facilities for seafood exports to the European
Union — the most stringent Hazard Analysis and Critical Control Point
(HACCP) controls.
The Company and its subsidiary Slurry-21 Co., Ltd. plan to expand
sales of slurry ice manufacturing systems to meet tougher health and
safety standards in food production and more rigorous freshness
demands for marine products logistics companies.
▼ GPS buoy wave/Tsunami/Tide observation system ▼ Movable slurry ice manufacturing system

Technological Development
Basic policy Plans for fiscal year 2010

Our basic policy is to focus on research and development Regarding development activities in fiscal year 2010 (ending
activities in line with our medium-term management plan March 31, 2011), in principle we will maintain our fiscal 2009
Hitz Innovation II under the slogan “Impact and Speed.” Our policies and areas of focus.
research and development structure consists of the Business In the environmental protection, industrial plant and energy
and Product Development Headquarters which oversees business areas, we aim to upgrade high-efficiency waste-to-
two units: the Product Development Project Department, energy systems and stoker-type incinerators, make progress
which promotes product and system development in existing with the development of proprietary manufacturing processes
businesses and new businesses in the form of projects, and for bioethanol and biodegradable plastic, and complete the
the Technical Research Institute, which is responsible for demonstration systems for vapor compression MED method.
the development of product elemental technologies and In the machinery and infrastructure business area, we
production technologies as well as the development of future will foster innovations in production technologies using laser
core technologies. These units pursue development activities, welding technologies and robot welding and also continue
while seeking to strengthen collaboration with business development of a demonstration-machine flap gate for
divisions and sales divisions. protection against tsunami and flood tide disasters.
In the precision machinery business area, we will continue
with the development of high-performance film-forming
technologies using the Roll to roll method, and vacuum
Results for fiscal year 2009
evaporation equipment for OLED as part of a NEDO project.
Development activities in fiscal year 2009 focused on In up-and-coming fields, we will continue developing new
72 themes, including the improvement and upgrading of technology such as carbon nanotubes and elastomers made
existing products, as well as new business and new product using Eucommia gum in preparation for practical application.
development.
In environmental protection, industrial plants and energy
business areas, we made progress with the development of
high-efficiency waste-to-energy systems and low emission
stoker-type incinerators. We also began manufacturing
demonstration systems for our vapor compression MED
(multi-effect desalination) method. We have also launched the
manufacture of bioethanol, and the development of a high-
performance dehydration film, which will contribute to the
realization of a low-carbon society. Roll to roll continuous
In the machinery and infrastructure business areas, we membrane formation
equipment
achieved significant improvements in quality and productivity
through the commercial application of laser welding
technology, and we also pursued development activities that
will lead to improvements in production technology such as
the development of technology for the simulation of residual
stress fields in welded structures. Also, in disaster prevention
business, we made progress with the development of an
electric discharge impulse crushing method and flap gates for
protection against tsunami and flood tide disasters.
In the precision machinery business area, we improved Flap gate-type wave breaker
the performance of equipment related to the integrated (water tank trial)
manufacturing of solar cell films, focusing on our film-forming

machine with elastic metal roll UF roll and our Roll to roll
continuous membrane formation equipment, as well as laser
precision patterning equipment. In OLED-related businesses,
we continued to take part in a NEDO project aimed at the
development of large-scale OLED film-forming equipment.
We also conducted research in up-and-coming fields, Eucommia woods
such as carbon nanotubes, all solid type lithium-ion cells and
Duzhong elastomers made
duzhong elastomers made using Eucommia gum.
using Eucommia

Intellectual Property Activity Report
Basic policy
At specialist units dedicated to management of
Hitachi Zosen Corporation’s intellectual property strategy intellectual property, we have 13 “patent managers” working
supports long-term management and business strategy and is at our Business & Product Development Headquarters and
geared to research and development strategy. In other words, the separate business divisions. In addition, 13 “patent
we seek actively to acquire industrial property rights in fields leaders” have been appointed (three at the Business & Product
we are strategically developing, to contribute to the efficient Development Headquarters and 10 at some of the business
pursuit of our business goals. We also set the direction of divisions). Specialist staff at the Legal and Intellectual Property
technological development targeted by our research and Department work together with the patent managers and
development strategy, and we invest management resources patent leaders to discover patent possibilities and applications
on a priority basis in key development projects so as to protect for the Company’s research findings (i.e., potential inventions)
our proprietary technologies and further expand the fields in and take them to the patent application stage.
which we possess unrivalled technological superiority. To encourage staff to do the work required to discover
In addition, specialist units dedicated to the management valuable new technologies and processes, and to reward
of intellectual property provide guidance to the managements them when they are successful, we have laid down
of all other members and affiliates of the Hitachi Zosen Group regulations governing the patent application process, and
in respect to the ethical pursuit and protection of patent rights, have stipulated criteria for judging the originality and value
so as to realize Groupwide intellectual property management of inventions. Monetary rewards are given to inventors when
that is in conformity with our business philosophy. patent application, registration and practical application occurs.
Rewards for practical application are based on a fair and
impartial evaluation process that takes into account the market
value of the invention. This is reflected in the payment to the
Medium-term intellectual property activities
inventor.
Patent applications and related activities conducted by Hitachi Outstanding inventions owned by Hitachi Zosen
Zosen’s Business and Product Development Headquarters, Corporation are also awarded prizes by outside agencies.
are motivated by the basic principle that “all research starts Patent No. 3194904 relating to a sheet and film-forming roll
with the acquisition of a patent.” Our researchers work to deposition system received the 2009 Osaka Outstanding
discover new ideas and uncover practical applications for Invention Award, while Patent No. 3247059 relating to an
them, and then to ensure that application is made for a ash treatment system and Patent No. 3100532 relating to
patent on the invention that is invulnerable to challenge. Using an electric discharge impulse crushing system were awarded
intellectual property tools known as “technology maps” and 2009 Kinki Regional Invention Awards. Patent No. 3803177
“patent maps” to visually represent related patent information, relating to a GPS-wave meter (tsunami detection) system also
we analyze the areas in which we are weak and those in which won an award in Japan’s National Invention Awards 2010.
we are strong in terms of patent rights. This analysis is then As of the end of fiscal year 2009 (ended March 31, 2010),
used to maintain our position in our areas of strength while Hitachi Zosen Corporation holds 739 patents in Japan and
strengthening our position in areas of weakness. 76 overseas. It also holds 30 design rights in Japan and 112
Our aim is to acquire patent rights through fair means, trademark rights.
and to apply those rights over an appropriate scope of
business operations. We follow an ethical patent acquisition
and protection policy to facilitate fair competition through Recent patents granted
mutual respect for patent rights. The intellectual property rights Japan
Overseas
we have acquired help to support and protect our business
operations, and to assure us of business continuity.
758 743 739
713 701
Management of intellectual property rights

To coordinate intellectual property activities across Group
companies, we have established specialist units dedicated to
the management of intellectual property within Hitachi Zosen 100 93 83 82 76
Corporation’s Head Office organization. These specialist units
provide support and guidance to subsidiaries and affiliates of
2005 2006 2007 2008 2009
the Hitachi Zosen Group as necessary on the management of (FY)
intellectual property as well as possible litigation.

Corporate Governance and Compliance
We are pushing ahead to establish a framework that enables efficient corporate governance, as we recognize
that enhancement of corporate governance is one of our top priority management issues to ensure corporate
soundness, transparency and efficiency, increase corporate value, and fulfill the Company’s responsibilities as a
good corporate citizen.
Furthermore, in order to strengthen the internal control system still further we have drawn up a Basic Policy for
Internal Control, and are aiming to improve the effectiveness of corporate governance and raise corporate value
based on this policy.
Corporate governance system a division responsible for internal audits. The Internal Auditing
Group within the department implements ongoing internal audits
Our principal management decision-making bodies consist of the related to matters such as finance and accounting, internal
Board of Directors and the Management Strategy Committee. controls and procedures, business risks and compliance across
The Board of Directors decides upon important matters such all management activities. At the same time, the Internal Control
as basic management policies, and oversees the execution of Group within the Internal Auditing Department makes assessments
operations. The Management Strategy Committee, which consists of internal controls on financial reporting in line with the stipulations
of top management personnel, conducts thorough discussion of the Financial Instruments and Exchange Act, aiming at the
of basic strategies and important matters. This system facilitates improvement of internal control functions through the exchange of
appropriate management decisions. information with the corporate auditors at appropriate times.
As members of the Board of Directors, directors are responsible
for management decision-making and oversight, and as managing Compliance system
and supervising executives who also share responsibilities for
the execution of business, they instruct, lead and supervise the We are working proactively on strengthening compliance
divisions in charge. The Company has also adopted an executive management as a priority management issue in order to conduct
officer system, which is aimed at striking a balance between management in conformity with laws and regulations and corporate
strengthening the supervision function performed by the directors ethics, and fulfill the Company’s social responsibilities.
and facilitating the swift and appropriate execution of business. In We have established a Compliance Committee, with the
order to achieve this objective, some of the business execution representative director serving as chairman. Under this committee,
functions performed by directors are delegated to executive surveys and verifications of all corporate activities are conducted
officers. As of July 2010, there are 10 directors and 11 executive regularly from the legal and corporate ethical standpoints.
officers. Furthermore, the Hitachi Zosen Group has established the “Hitachi
Auditing functions are performed by the Board of Auditors, Zosen Group Ethical Behavior Charter” as an ethical behavior
comprising 2 full-time corporate auditors and 2 outside auditors guideline for all of the directors and employees of the Group to
(part-time corporate auditors) as of July 2010. Corporate auditors observe. By educating all directors and employees, the Group is
attend meetings of the Board of Directors regularly and other aiming to improve awareness of legal compliance and promote the
meetings as needed, and implement audits of management from maintenance of a high standard of corporate ethics. At the same
a neutral, objective standpoint under a system in which they can time we have established a whistle-blowing system to enable
fully audit the execution of operations of directors and other high- employees to consult with/report to an external consultant so that
ranking executives. In addition to the corporate auditors (Board we can promptly and effectively prevent, detect, and address any
of Auditors), we have set up an Internal Auditing Department as legal violations.
General Meeting of Shareholders

Assignment/ Assignment/
Displacement Displacement
Board of Directors Audit Board of Corporate Auditors

(Directors) (Corporate Auditors)
Oversight Oversight
Management Strategy Guidance Compliance Committee

Committee Monitoring Whistleblower Desk
Reporting Instruction
Account
Auditing
Departments of the Company Accounting Auditors
Audit
Affiliated Companies Internal Auditing Department
Assessment

Board of Directors, Corporate Auditors and Executive Officers
(As of June 25, 2010)
Representive Director Vice Chairman Representative Director

Chairman & President Executive Vice President
Minoru Furukawa Shunsaku Yahata Koichiro Anzai
Managing Director Managing Director Managing Director

Akifumi Mitani Hisao Matsuwake Seiichiro Tsurisaki
Director Director Director Director

Toru Shimizu Takashi Tanisho Kenji Sawada Masayuki Morikata
Full-time Corporate Auditor Full-time Corporate Auditor Corporate Auditor Corporate Auditor
Hiromitsu Miyasaka Motohiro Fujii Sakae Kanno Junnosuke Ban
Managing Executive Officer Managing Executive Officer Executive Officer Executive Officer Executive Officer
Shosaku Umezawa Toru Yoshioka Koji Abo Masahiro Sakai Ryoji Kasumoto
Executive Officer Executive Officer Executive Officer Executive Officer Executive Officer Executive Officer
Wataru Kobashi Masajiro Shimizu Nobuyoshi Mori Masayuki Tanigawa Shoichi Momose Seiji Shimoda

Tackling Environmental Issues
Efforts to protect the environment of specific halons in extinguishants in 2002, and we aim to reduce
Hitachi Zosen’s fundamental policy is to achieve a constant state CO2 emissions to 6% below the level for the base year of fiscal
of harmony between its business operations in every area and year 1990 (ended March 31, 1991) as an annual average figure
the needs of the natural environment. To embody our efforts over the 2008-2012 five-fiscal-year period. To achieve this, we
on environmental issues, we formulated a number of basic are improving operational processes, introducing energy-saving
environmental protection policies in 1992. These policies include transformers and compressors, using energy-saving equipment
the statement that: “The Company recognizes its responsibilities such as inverter fluorescent lights, as well as setting and observing
as a good corporate citizen and proactively solves environmental standards for air conditioning temperatures.
issues on a global basis. It endeavors to promote environmental We set a target of cutting the discharge of waste from 1991
protection based on the understanding that the protection of nature levels by 15% by 2000, which we achieved in 1999. A new goal
and the living environments of local communities are corporate was set in 2000 to cut the level further to 10% below 2000 levels
social responsibilities.” In 1993, the Company’s Environmental by 2010, with the aim of reducing landfill to 40% below 1999
Protection Promotion Committee drew up an environmental levels by 2010.
protection promotion plan based on these basic policies. With this We are stepping up our efforts to recycle all scrap metal, use
plan, we are now implementing global environmental protection waste paper as materials for recycled paper, and turn waste oil
activities, such as protecting the ozone layer, mitigation of global into fuel. We are also recycling scrap wood into litter for livestock,
warming, and reducing and recycling waste, in addition to flux into roadbed materials, and shotblast waste sand into cement
conventional activities. Each office and work-place has set targets materials.
based on this promotion plan, and the staff at each location
are striving to preserve the environment. Since 1994, we have
audited offices concerning environmental protection once a year,
according to internal audit standards which include the provision
Managing chemical substances
of global environment protection. We fully comprehend the issues regarding exhaust gases and the
quantity of chemical substances that are moved in accordance
with the PRTR method, and we manage such substance
appropriately, while taking steps to reduce their amount under
Promoting environmental management systems the newly formulated “Voluntary Management Plan for Chemical
In March 1998, Hitachi Zosen’s Maizuru Works became Japan’s Substances.”
first shipyard to obtain ISO14001 certification. Since then, six
domestic workplaces, one district and three divisions, have
acquired the certification. We plan to continuously improve our
environmental management systems so that we can implement Promoting communication on environmental
appropriate countermeasures against risks associated with the protection
environment. We have actively disclosed the contents of our efforts on global
environmental protection and local environmental preservation,
and have published an environmental report every year since
2002. We also cooperate with local governments and communities
Promoting global environmental protection and
on various activities for promoting environmental protection (such
the conservation of energy and natural resources as local recycling and tree-planting campaigns) and participate
As part of its efforts to reduce the use of ozone-depleting in such activities. Furthermore, we join hands with organizations
substances, we discontinued the use of specified involved in environmental protection, and exchange activities and
chlorofluorocarbons and trichloroethane for washing in 1995, and information with them.
Medium- and long-term targets
Fiscal year for Results for

Item Purpose Targets
achieving targets fiscal year 2009
Reduce energy consumption 2012

Reduction of energy
Suppression of CO2 rate by 6% compared with Annual average for Increased by 41%
consumption
fiscal year 1990 levels fiscal 2008–12
Reduce total waste discharge

Suppression of
rate by 10% from fiscal year 2010 Increased by 11%
waste discharge
2000 levels
Reduction of waste
materials Reduce total landfill disposal
Suppression of landfill
quantity by 40% compared 2010 Decreased by 1%
disposal quantity
with fiscal year 1999 levels

Financial Section
31 Consolidated Balance Sheets
33 Consolidated Statements of Income
34 Consolidated Statements of Changes in Net Assets
35 Consolidated Statements of Cash Flows
37 Notes to the Consolidated Financial Statements
56 Independent Auditors’ Report

Consolidated Balance Sheets
Hitachi Zosen Corporation and Consolidated Subsidiaries
At March 31, 2009 and 2010
Thousands of
Millions of yen U.S. dollars (Note 1)
2009 2010 2010
ASSETS
Current assets:
Cash and time deposits (Notes 5 and 15) ¥ 51,306 ¥ 55,826 $ 600,021
Receivables:
Trade notes and accounts:
Nonconsolidated subsidiaries and affiliates 4,259 3,599 38,682
Other 92,326 87,991 945,733
Other 5,751 3,917 42,100
Allowance for doubtful receivables (820) (591) (6,352)
101,516 94,916 1,020,163
Marketable securities (Note 3) 86 44 473

Inventories (Note 4) 46,432 32,824 352,795
Deferred tax assets (Note 20) 4,482 4,138 44,476
Prepaid expenses and other current assets (Note 5) 8,391 3,253 34,963
Total current assets 212,213 191,001 2,052,891
Property, plant and equipment, at cost (Note 5):

Land (Notes 7 and 21) 71,232 71,303 766,369
Buildings and structures (Note 21) 72,738 70,336 755,976
Machinery and equipment 81,670 89,629 963,339
Lease assets (Note 16) 144 428 4,600
Construction in progress 1,596 731 7,857
227,380 232,427 2,498,141
Less accumulated depreciation (94,103) (100,337) (1,078,429)
Property, plant and equipment, net 133,277 132,090 1,419,712
Intangible assets 1,622 1,644 17,670
Investments and other noncurrent assets:

Investments in nonconsolidated subsidiaries and affiliates (Notes 3 and 5) 9,498 14,141 151,988
Investments in securities (Notes 3 and 5) 6,312 6,448 69,304
Long-term loans receivable (Note 5) 144 109 1,172
Deferred tax assets (Note 20) 1,774 1,136 12,210
Other investments and noncurrent assets (Note 5) 3,584 3,805 40,896
Allowance for doubtful receivables (1,467) (1,316) (14,145)
Total investments and other noncurrent assets 19,845 24,323 261,425
Deferred assets 516 273 2,934

Total assets ¥367,473 ¥349,331 $3,754,632
See the accompanying Notes to the Consolidated Financial Statements.

Thousands of
2009 2010 2010
LIABILITIES
Current liabilities:
Notes and accounts payable:
Nonconsolidated subsidiaries and affiliates ¥ 388 ¥ 300 $ 3,225
Other 71,378 52,822 567,734
Short-term loans (Note 5) 14,200 10,946 117,648
Current portion of long-term debt (Note 5) 15,598 32,398 348,216
Accrued expenses 30,627 28,601 307,405
Accrued income taxes 1,885 882 9,480
Advances received on work in progress 30,789 23,296 250,387
Reserve for directors’ and corporate auditors’ bonuses 20 75 806
Reserve for product warranty 5,342 4,170 44,820
Reserve for losses on construction contracts 2,490 3,551 38,166
Reserve for losses from lawsuits 13,914 11,869 127,569
Other current liabilities 10,574 7,060 75,881
Total current liabilities 197,205 175,970 1,891,337
Long-term liabilities:
Long-term debt, less current portion (Note 5) 73,720 69,020 741,832
Deferred tax liabilities (Note 20) 1,563 1,723 18,519
Employees’ severance and retirement benefits (Note 19) 6,943 7,431 79,869
Directors’ and corporate auditors’ severance and retirement benefits 623 677 7,276
Negative goodwill 898 439 4,718
Other noncurrent liabilities (Note 5) 678 871 9,362
Total long-term liabilities 84,425 80,161 861,576
Total liabilities 281,630 256,131 2,752,913
CONTINGENT LIABILITIES (Note 6)
NET ASSETS (Note 8):

Common stock
Authorized — 2,000,000,000 shares
Issued — 796,073,282 shares at March 31, 2009 and 2010 45,442 45,442 488,413
Capital surplus 5,974 5,974 64,209
Retained earnings 20,708 28,587 307,255
Treasury stock, at cost — 1,448,905 shares in 2009
— 2,081,269 shares in 2010 (186) (267) (2,870)
Net unrealized holding losses on securities (377) (90) (967)
Net unrealized holding losses on hedging derivatives (403) (463) (4,976)
Land revaluation difference (Note 7) (156) (140) (1,505)
Foreign currency translation adjustments (245) (316) (3,397)
Subscription rights to shares — 1 11
Minority interests in consolidated subsidiaries 15,086 14,472 155,546
Total net assets 85,843 93,200 1,001,719
Total liabilities and net assets ¥367,473 ¥349,331 $3,754,632

Consolidated Statements of Income
For the Years Ended March 31, 2009 and 2010
Thousands of
2009 2010 2010
Net sales ¥298,605 ¥273,526 $2,939,875
Cost of sales (Note 9) 255,554 230,896 2,481,685
Gross profit 43,051 42,630 458,190
Selling, general and administrative expenses 31,373 29,073 312,478
Operating income 11,678 13,557 145,712
Other income (expenses):

Interest and dividend income 302 224 2,407
Interest expense (1,732) (1,479) (15,896)
Foreign exchange loss (12) (156) (1,677)
Equity in net income of nonconsolidated subsidiaries and affiliates 62 3,688 39,639
Gain on sale of property (Note 10) 1,603 — —
Reversal of allowance for losses from lawsuits (Note 11) 822 — —
Provision for allowance for losses from lawsuits (Note 12) (5,700) (6,175) (66,369)
Impairment loss (Note 13) (1,096) — —
Other, net (1,308) 234 2,515
Total other income (expenses) (7,059) (3,664) (39,381)
Income before income taxes and minority interests 4,619 9,893 106,331
Income taxes (Note 20)
Current 3,374 1,245 13,381
Deferred (1,284) 1,077 11,576
Income before minority interests 2,529 7,571 81,374
Minority interests in net income of consolidated subsidiaries 1,081 (335) (3,600)
Net income ¥ 1,448 ¥ 7,906 $ 84,974
U.S. dollars
Yen (Note 1)
2009 2010 2010
Amounts per share (Note 2)
Net income — basic ¥1.82 ¥9.95 $0.11
Net income — diluted 1.53 8.38 0.09
Cash dividends — 2.00 0.02

Consolidated Statements of Changes in Net Assets
Thousands of
2009 2010 2010
Common stock:
Balance at beginning of year ¥45,442 ¥45,442 $488,413
Balance at end of year ¥45,442 ¥45,442 $488,413
Capital surplus:
Balance at beginning of year ¥ 5,975 ¥ 5,974 $ 64,209
Treasury stock purchased, net (1) (0) (0)
Balance at end of year ¥ 5,974 ¥ 5,974 $ 64,209
Retained earnings:
Net income 1,448 7,906 84,974
Increase due to consolidation of additional subsidiaries (2) — —
Decrease due to inclusion of affiliates — (11) (118)
Reversal of land revaluation difference — (16) (172)
Treasury stock (Note 14):

Balance at beginning of year ¥ (160) ¥ (186) $ (1,999)
Treasury stock purchased, net (26) (81) (871)
Balance at end of year ¥ (186) ¥ (267) $ (2,870)
Net unrealized holding gains (losses) on securities:

Balance at beginning of year ¥ 108 ¥ (377) $ (4,052)
Other (485) 287 3,085
Balance at end of year ¥ (377) ¥ (90) $ (967)
Net unrealized holding gains (losses) on hedging derivatives:

Balance at beginning of year ¥ 482 ¥ (403) $ (4,331)
Other (885) (60) (645)
Land revaluation difference (Note 7):

Reversal of land revaluation difference — 16 172
Foreign currency translation adjustments:

Other (77) (71) (763)
Subscription rights to shares:

Balance at beginning of year ¥ — ¥ — $ —
Other — 1 11
Balance at end of year ¥ — ¥ 1 $ 11
Minority interests in consolidated subsidiaries:

Other 276 (614) (6,599)
Shares
2009 2010
Number of shares of common stock:
Balance at beginning of year 796,073,282 796,073,282
Balance at end of year 796,073,282 796,073,282

Consolidated Statements of Cash Flows
Thousands of
2009 2010 2010
Cash flows from operating activities:
Income before income taxes and minority interests ¥ 4,619 ¥ 9,893 $106,331
Adjustments to reconcile income before income taxes and minority interests
to net cash provided by operating activities:
Depreciation 7,638 8,480 91,144
Impairment loss 1,096 — —
Increase (decrease) in allowance for doubtful receivables 301 (389) (4,181)
Increase in employees’ severance and retirement benefits 863 488 5,245
Increase (decrease) in reserve for losses on construction contracts (1,086) 1,061 11,404
Increase (decrease) in reserve for losses from lawsuits 4,878 (2,045) (21,980)
Decrease in reserve for factory relocation expense (867) — —
Interest and dividend income (302) (224) (2,407)
Interest expense 1,732 1,479 15,896
Equity in net income of nonconsolidated subsidiaries and affiliates (62) (3,688) (39,639)
Gain on sale of property, plant and equipment (1,603) — —
Gain on sale of investments in securities (126) (82) (882)
Loss on devaluation of investments in securities 403 2 21
Loss on disposal of fixed assets 531 329 3,536
Decrease (increase) in trade receivables (2,358) 5,168 55,546
Decrease in inventories 1,933 13,719 147,453
Decrease (increase) in other current assets (3,524) 6,482 69,669
Increase (decrease) in trade payables 1,296 (18,012) (193,594)
Decrease in accrued expenses (6,036) (1,900) (20,421)
Increase (decrease) in advances received 3,296 (7,493) (80,535)
Decrease in other current liabilities (3,498) (4,733) (50,871)
Other (1,747) 224 2,407
Subtotal 7,377 8,759 94,142
Interest and dividends received 487 579 6,223
Interest paid (1,643) (1,575) (16,928)
Income taxes paid (3,873) (2,255) (24,237)
Net cash and cash equivalents provided by operating activities 2,348 5,508 59,200
Cash flows from investing activities:

Increase in time deposits (5,498) (4,360) (46,862)
Decrease in time deposits 5,742 1,188 12,769
Purchase of property, plant and equipment (11,505) (7,783) (83,652)
Proceeds from sales of property, plant and equipment 4,058 553 5,944
Purchase of intangible assets (270) (341) (3,665)
Purchase of investments in securities (545) (1,374) (14,768)
Proceeds from sales of investments in securities 518 559 6,008
Other 8 (1,101) (11,834)
Net cash and cash equivalents used in investing activities (7,492) (12,659) (136,060)

Thousands of
2009 2010 2010
Cash flows from financing activities:
Decrease in short-term loans and debt, net (2,261) (3,555) (38,209)
Proceeds from long-term debt 21,950 31,400 337,489
Payment of long-term debt (17,522) (16,008) (172,055)
Redemption of bonds (700) (700) (7,524)
Payments for retirement of bonds by purchase — (2,375) (25,527)
Other (298) (7) (75)
Net cash and cash equivalents provided by financing activities 1,169 8,755 94,099
Effect of exchange rate changes on cash and cash equivalents (109) (9) (96)
Net increase (decrease) in cash and cash equivalents (4,084) 1,595 17,143
Cash and cash equivalents at beginning of year 54,229 50,095 538,424
Net decrease in cash and cash equivalents with exclusion of a consolidated subsidiary (50) — —
Cash and cash equivalents at end of year (Note 15) ¥50,095 ¥51,690 $555,567

Notes to the Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial The difference between the cost of investments in and the value
Statements of the net assets of acquired subsidiaries and affiliates are primarily
The accompanying consolidated financial statements of Hitachi amortized using the straight-line method over 5 years.
Zosen Corporation (“the Company”) and its consolidated subsidiar- The consolidated financial statements include the accounts of five
ies (together, “the Companies”) have been prepared in accordance consolidated subsidiaries (five in the year ended March 31, 2009)
with the provisions set forth in the Japanese Financial Instruments the fiscal year-end of which is December 31. Appropriate adjust-
and Exchange Law and its related accounting regulations, and in ments were made for significant transactions during the period from
conformity with accounting principles generally accepted in Japan December 31 to March 31, the date of the consolidated financial
(“Japanese GAAP”), which are different in certain respects as to statements.
application and disclosure requirements from International Financial In the elimination of investments in subsidiaries, the assets and
Reporting Standards. liabilities of the subsidiaries, including the portion attributable to
The accounts of the Company’s overseas subsidiaries are based minority shareholders, are evaluated using the fair value at the time
on their accounting records maintained in conformity with generally the Company acquired control of the respective subsidiary.
accepted accounting principles prevailing in the respective countries
of domicile. As discussed in Note 2, the accounts of consolidated b) Cash Flow Statements
overseas subsidiaries for the year ended March 31, 2010 are pre- In preparing the consolidated statements of cash flows, cash on
pared in accordance with either International Financial Reporting hand, readily-available deposits and highly liquid debt investments
Standards or U.S. generally accepted accounting principles. The with maturities not exceeding three months at the time of purchase
accompanying consolidated financial statements have been reformat- are considered to be cash and cash equivalents.
ted and translated into English (with some expanded descriptions)
from the consolidated financial statements of the Company prepared c) Translation of Foreign Currencies
in accordance with Japanese GAAP and filed with the appropriate Foreign currency monetary assets and liabilities are translated into
Local Finance Bureau of the Ministry of Finance as required by the Japanese yen at the year-end rates, and the resulting translation
Financial Instruments and Exchange Law. Certain supplementary gains or losses are included in the current statement of income.
information included in the statutory Japanese language consolidated Assets and liabilities of the consolidated overseas subsidiaries are
financial statements is not presented in the accompanying consoli- translated into Japanese yen using the exchange rates prevailing at
dated financial statements. the end of each fiscal year. Revenue and expenses are translated at
The translations of the Japanese yen amounts into U.S. dollars the average rates of exchange for the respective years. The resulting
are included solely for the convenience of readers outside Japan, foreign currency translation adjustments are shown as a separate
using the prevailing exchange rate at March 31, 2010, which was component of net assets, net of minority interests in the consolidated
¥93.04 to U.S. $1.00. The translations should not be construed balance sheets.
as representations of what the Japanese yen amounts have been,
could have been, or could in the future be converted into U.S. dol- d) Revenue Recognition
lars at this or any other rate of exchange. For construction for which the portion completed by the end of
the fiscal year can be determined with certainty, the Companies
2. Significant Accounting Policies record revenues by the percentage of completion method (the
a) Consolidation progress of work is measured by the percentage of cost method).
The accompanying consolidated financial statements include the For other construction, the Companies record revenues at the time
accounts of the Company and significant companies over which of delivery using the completed contract method.
the Company has power of control through majority voting rights or Until the year ended March 31, 2009, the Company had recorded
the existence of certain other conditions evidencing control by the revenues and costs of sales on long-term contracts of a duration in
Company. Investments in nonconsolidated subsidiaries and affili- excess of one year and an amount in excess of ¥500 million (certain
ates over which the Company has the ability to exercise significant consolidated subsidiaries used other revenue amounts), primarily by
influence over operating and financial policies are accounted for by the percentage of completion method, measured by the percentage
the equity method. of costs incurred to date to the estimated total construction costs,
The consolidated financial statements consist of the accounts of and had recorded revenues and costs of sales on other contracts
the Company and its sixty-one significant subsidiaries (sixty-seven by the completed contract method.
in the year ended March 31, 2009) that meet the control require- Effective from the year ended March 31, 2010, the Companies
ments for consolidation. Intercompany transactions and accounts adopted the new accounting standard, “Accounting Standard
have been eliminated in the consolidation. for Construction Contracts” (Statement No. 15 issued by the
Investments in one nonconsolidated subsidiary (one in the year Accounting Standards Board of Japan on December 27, 2007) and
ended March 31, 2009) and eleven affiliates (nine in the year ended the implementation guidance, “Guidance on Accounting Standard for
March 31, 2009) are accounted for by the equity method. Construction Contracts” (Guidance No. 18 issued by the Accounting

Standards Board of Japan on December 27, 2007). Revenues and g) Derivatives and Hedge Accounting
costs of sales on construction for which the portion completed by Derivative financial instruments are stated at fair value and changes
the end of the fiscal year can be determined with certainty are rec- in the fair value are recognized as gains or losses unless derivative
ognized by the percentage of completion method (the progress of financial instruments are used for hedging purposes.
work is measured by the percentage of cost method). Revenues and (1) Hedge accounting
costs of sales on other construction are recorded by the completed The Companies defer recognition of gains or losses resulting from
contract method. As a result, for the year ended March 31, 2010, net changes in the fair value of derivative financial instruments until the
sales were ¥6,671 million ($71,700 thousand) more, and operating related losses or gains on the hedged items are recognized.
income and income before income taxes and minority interests were However, if interest rate swap contracts are used as hedges and
both ¥777 million ($8,351 thousand) more than they would have meet certain hedging criteria, the net amount to be paid or received
been with the previous method. The effects on segment information under the interest rate swap contracts is added to or deducted from
are described in Note 22, “Segment Information”. the interest on the asset or liability for which the swap contract was
executed.
e) Allowance for Doubtful Receivables
For receivables from insolvent customers who are undergoing (2) Hedging instruments and hedged items
bankruptcy or other collection proceedings or who are in a similar Hedging instruments: Interest rate swap contracts
financial condition, the allowance for doubtful accounts is provided Hedged items: Interest on loans and bonds payable
based on an evaluation of each customer’s financial condition and
an estimation of recoverable amounts due to the existence of secu-
Hedging instruments: Forward foreign exchange contracts and
rity interests or guarantees. other derivatives
For other receivables, the allowance for doubtful receivables is
Hedged items: Trade receivables and expected trade
provided based on the Companies’ actual rate of bad debts in the
receivables denominated in foreign
past. currencies from exports of products,
trade payables denominated in foreign
f) Securities currencies from imports of materials
Trading securities are stated at fair market value. Gains and
losses realized on disposal and unrealized gains and losses from (3) Hedging policy
market value fluctuations are recognized as gains or losses in the The Companies use derivative financial instruments to hedge
period of the change. Held-to-maturity debt securities are stated at future risks of interest rate fluctuations and future risks of foreign
amortized cost. Equity securities issued by subsidiaries and affili- exchange fluctuations in accordance with their internal policies and
ated companies which are not consolidated or accounted for by the procedures.
equity method are stated at moving average cost. Available-for-sale
securities with available fair market values are stated at fair market (4) Evaluation of hedge effectiveness
value. Unrealized holding gains and unrealized holding losses on The Companies evaluate hedge effectiveness by comparing the
these securities are reported, net of applicable income taxes, as a cumulative changes in cash flows and foreign currency exchange
separate component of net assets. Realized gains and losses on the or the changes in fair value of hedged items and the corresponding
sale of such securities are computed using moving average cost. changes in the hedging derivative instruments.
Securities with no available fair market value which are classified as
available-for-sale securities are stated at moving average cost. (5) Control over use of derivatives
If the market value of held-to-maturity debt securities, equity When the accounting sections of group companies use deriva-
securities issued by nonconsolidated subsidiaries and affiliated tives, they follow the group companies’ administration rules, which
companies or available-for-sale securities declines significantly, such the Board of Directors of the Company has approved to control the
securities are stated at fair market value and the difference between risks of using derivatives.
fair market value and the carrying amount is recognized as loss in
the period of the decline. If the fair market value of equity securi- h) Inventories
ties issued by nonconsolidated subsidiaries or affiliated companies Work in progress is composed of the accumulated production
not on the equity method is not readily available, such securities costs of contracts. The accumulated production costs include direct
are written down to net asset value with a corresponding charge production costs, factory and engineering overhead and other costs
in the statement of income in the event net asset value declines incurred. And it is stated at the lower of the accumulated produc-
significantly. In these cases, the fair market value or the net asset tion costs of contracts or net realizable value at the end of the fiscal
value will be the carrying amount of the securities at the beginning year.
of the next year.

Raw materials and supplies are stated at the lower of the costs, issued by the Accounting Standards Board of Japan on November
which are generally determined by the specific identification method 29, 2005).
or the moving average method, or net realizable value at the end of
the fiscal year. m) Reserve for Product Warranty
Effective from the year ended March 31, 2009, the Companies The reserve for product warranty, which is based on the experi-
adopted the standard, “Accounting Standard for Measurement of ence of the past two years, is provided to cover possible warranty
Inventories” (Statement No. 9 issued by the Accounting Standards costs incurred after delivery or completion of construction.
Board of Japan on July 5, 2006). As a result, operating income and
income before income taxes and minority interests were both ¥389 n) Reserve for Losses on Construction Contracts
million less than they would have been with the previous method. To provide for losses on construction contracts, the Companies
The effects on segment information are described in Note 22, record an estimated amount at the end of the fiscal year.
“Segment Information”.
o) Reserve for Losses from Lawsuits
i) Depreciation and Amortization To provide for future potential losses from lawsuits, the Companies
Depreciation, except for leased assets, is computed, with minor record a reasonably estimated amount.
exceptions, by the declining balance method. However, buildings
acquired after March 31, 1998 are depreciated using the straight- p) Employees’ Severance and Retirement Benefits
line method. The Companies provide two types of post-employment benefit
Effective from the year ended March 31, 2009, the Company and plans, unfunded lump-sum payment plans and funded noncontribu-
some consolidated subsidiaries changed the period of depreciation tory pension plans, under which all eligible employees are entitled
for machinery in accordance with the revised Corporate Tax Law of to benefits based on the level of wages and salaries at the time of
Japan. As a result, for the year ended March 31, 2009, operating retirement or termination, length of service and certain other factors.
income and income before income taxes and minority interests were The Companies provide for employees’ severance and retirement
both ¥280 million less than they would have been with the previous benefits based on the estimated amounts of projected benefit obli-
method. gation and the fair value of plan assets.
Amortization of intangible assets, except for leased assets, is Actuarial gains and losses are recognized in expenses using the
computed on the straight-line method based on the useful life of the straight-line method within the average of the estimated remaining
asset. service years commencing with the following period.
Depreciation for leased assets is computed on the straight-line Effective from the year ended March 31, 2010, the Companies
method over the term of the lease to the residual value of zero. adopted the new accounting standard, “Partial Amendments to
Finance leases commencing prior to April 1, 2008 which do not Accounting Standard for Retirement Benefits (Part 3)” (Statement
transfer ownership and do not have bargain purchase provisions No. 19 issued by the Accounting Standards Board of Japan on July
are accounted for in the same method as operating leases under 31, 2008). This adoption had no effect on operating income and
Japanese GAAP. income before income taxes and minority interests.
j) Software Costs q) Directors’ and Corporate Auditors’ Severance and

The Companies include internal use software in intangible assets Retirement Benefits
and depreciate it using the straight-line method over the estimated To provide for payment of retirement benefits to directors and
useful life of five years. corporate auditors, the Companies record the required amount,
based on internal regulations for retirement benefits for directors
k) Deferred Assets and corporate auditors at the end of the fiscal year. For the year
Bond issue expenses are amortized on the straight-line method ended March 31, 2010, since the required amount based on internal
over the repayment period of the bond. regulations occurred, the Company recorded the required amount in
accordance with the “Auditing Treatment Related to Reserve Defined
l) Reserve for Directors’ and Corporate Auditors’ Bonuses Under the Special Taxation Measures Law, Reserve Defined Under
To provide for payment of bonuses to directors and corporate the Special Law and Reserve for Directors and Corporate Auditor
auditors, the Companies record an estimated amount at the end of Retirement Benefits” (Auditing and Assurance Practice Committee
the fiscal year. Report No. 42 issued by the Japanese Institute of Certified Public
For the year ended March 31, 2010, the Company decided to Accountants on April 13, 2007).
pay directors’ and corporate auditors’ bonuses which are subject
to approval at the annual shareholders’ meeting, and recorded r) Research and Development Expenses
an estimated amount at the end of the fiscal year in accordance Research and development expenses are charged to selling,
with “Accounting Standard for Directors’ Bonus” (Statement No. 4 general and administrative expenses and manufacturing costs

as incurred. Research and development expenses amounted to bargain purchase provisions had been accounted for in the same
¥4,502 million and ¥4,532 million ($48,710 thousand) for the years manner as operating leases under Japanese GAAP.
ended March 31, 2009 and 2010, respectively. Effective from the year ended March 31, 2009, the Companies
adopted the new accounting standard, “Accounting Standard for
s) Income Taxes Lease Transactions” (Statement No. 13 issued by the Accounting
The provision for income taxes is based on income for financial Standards Board of Japan on March 30, 2007) and the implemen-
statement purposes. Deferred income taxes are recognized for loss tation guidance, “Guidance on Accounting Standard for Lease
carryforwards and temporary differences between financial and tax Transactions” (Guidance No. 16 issued by the Accounting Standards
reporting purposes. Income taxes comprise corporation tax, enter- Board of Japan on March 30, 2007). The new accounting standards
prise tax, and prefectural and municipal inhabitants taxes. require that all finance lease transactions be treated as capital leases.
The Company and some of the consolidated subsidiaries adopted This adoption had no material effect on gain or loss for the year ended
the Japanese tax regulations allowing the Company to file under a March 31, 2009. A consolidated subsidiary continues to account
consolidated taxation system. for finance leases commencing prior to April 1, 2008 which do not
transfer ownership and do not have bargain purchase provisions in
t) Amounts Per Share the same manner as operating leases under Japanese GAAP.
Basic net income per share is computed based on the weighted
average number of shares of common stock outstanding during x) Reclassifications
each year. Certain reclassifications were made to previously reported amounts
Diluted net income per share is computed based on the weighted for the fiscal year ended March 31, 2009 to conform to the fiscal year
average number of shares after consideration of the dilutive effect ended March 31, 2010 presentation. These reclassifications had no
of the shares of common stock issuable upon the exercise of stock effect on previously reported net loss or total shareholders’ equity.
purchase warrants.
3. Securities
u) Unification of Accounting Policies Applied to Foreign a) The following tables summarize acquisition costs, book values
Subsidiaries for Consolidated Financial Statements and fair values of securities with available fair values as of March
Effective from the year ended March 31, 2009, the Companies 31, 2009 and 2010:
adopted “Practical Solution on Unification of Accounting Policies (1) Trading securities:
Applied to Foreign Subsidiaries for Consolidated Financial Statements” At March 31, 2009
(Task Force No. 18 issued by the Accounting Standards Board of Millions of yen
Japan on May 17, 2006). The adoption of this Task Force No. 18 had Book value (fair value) ¥74
no effect on the consolidated financial statements for the year ended Amount for the year of net
March 31, 2009. unrealized losses included in
the statements of income (16)
v) Accounting Standard for Lease Transactions as Lessee At March 31, 2010

Finance leases which do not transfer ownership and do not have Thousands of
Millions of yen U.S. dollars
bargain purchase provisions had been accounted for in the same
Amount for the year of net
manner as operating leases under Japanese GAAP. unrealized gains included in
Effective from the year ended March 31, 2009, the Companies the statements of income ¥9 $97
Lease Transactions” (Statement No. 13 issued by the Accounting
(2) Held-to-maturity debt securities:
Standards Board of Japan on March 30, 2007) and the implemen-
At March 31, 2009
tation guidance, “Guidance on Accounting Standard for Lease
Securities with available fair values exceeding book values:
Transactions” (Guidance No. 16 issued by the Accounting Standards
Millions of yen
Board of Japan on March 30, 2007). The new accounting standards Book value Fair value Difference
require that all finance lease transactions be treated as capital
Government bonds ¥865 ¥880 ¥15
leases. Finance leases commencing prior to April 1, 2008 which do
not transfer ownership and do not have bargain purchase provisions
are accounted for in the same manner as operating leases under At March 31, 2010
Japanese GAAP. This adoption had no effect on gain or loss for the Securities with available fair values exceeding book values:
year ended March 31, 2009. Millions of yen
Book value Fair value Difference
w) Accounting Standard for Lease Transactions as Lessor Government bonds ¥865 ¥877 ¥12
Finance leases which do not transfer ownership and do not have Others 15 16 1

At March 31, 2010 Securities with book values (fair values) not exceeding acquisition costs:
Securities with available fair values exceeding book values: Thousands of U.S. dollars
Thousands of U.S. dollars Book Acquisition
value cost Difference
Book value Fair value Difference
Equity securities $10,372 $12,812 $(2,440)
Government bonds $9,297 $9,426 $129
Others 96 107 (11)
Others 161 172 11
Total $10,468 $12,919 $(2,451)
(3) Available-for-sale securities:

At March 31, 2009 Note. As to non-listed equity securities, there was no available fair
Securities with book values (fair values) exceeding acquisition costs: market price and it was considered to be extremely difficult to
Millions of yen determine fair value, so these securities were not included in
Acquisition Book the table of (3) Available-for-sale securities.
cost value Difference
Equity securities ¥142 ¥197 ¥55 b) The following table summarizes book values of securities with no
Bond 6 9 3 available fair values as of March 31, 2009:
Others 9 15 6 Available-for-sale securities:
Total ¥157 ¥221 ¥64 Millions of yen
Book value
Securities with book values (fair values) not exceeding acquisition costs:
Type 2009
Millions of yen
Non-listed equity securities ¥4,155
Acquisition Book
cost value Difference Loan trusts 10
Equity securities ¥1,480 ¥1,045 ¥(435) Investment securities in independent
Bond 1 1 — administrative entities 19
Others 11 9 (2)
Total ¥1,492 ¥1,055 ¥(437)
c) Available-for-sale securities with maturities and held-to-maturity
debt securities mature as follows:
At March 31, 2010 At March 31, 2009
Millions of yen
Securities with book values (fair values) exceeding acquisition costs:
Over one Over five
Millions of yen
year but years but
Book Acquisition Within one within within Over
value cost Difference year five years ten years ten years
Equity securities ¥757 ¥539 ¥218 Government bonds ¥— ¥ 3 ¥ 3 ¥860
Others 72 51 21 Other bonds 12 13 — —
Total ¥829 ¥590 ¥239 Total ¥12 ¥16 ¥ 3 ¥860
Securities with book values (fair values) not exceeding acquisition costs:
Millions of yen d) Total sales of available-for-sale securities in the year ended March
Book Acquisition
value cost Difference
31, 2009 amounted to ¥60 million, and the related gains and losses
Equity securities ¥965 ¥1,192 ¥(227)
amounted to ¥1 million and ¥0 million, respectively.
Others 9 10 (1)
Total sales of available-for-sale securities in the year ended March
Total ¥974 ¥1,202 ¥(228)
31, 2010 were as follows:
Millions of yen
At March 31, 2010 Amounts of Amounts of Amounts of
sales gains on sales losses on sales
Securities with book values (fair values) exceeding acquisition costs:
Equity securities ¥538 ¥93 ¥(15)
Thousands of U.S. dollars
Book Acquisition Others 21 5 (1)
value cost Difference Total ¥559 ¥98 ¥(16)
Equity securities $8,136 $5,793 $2,343
Others 774 548 226
Total $8,910 $6,341 $2,569
Amounts of Amounts of Amounts of
sales gains on sales losses on sales
Equity securities $5,782 $ 999 $(161)
Others 226 54 (11)
Total $6,008 $1,053 $(172)

4. Inventories As of March 31, 2010, the convertible bonds due in 2010 and
Inventories at March 31, 2009 and 2010 consisted of the following: 2012 were convertible into shares of common stock at the option of
Thousands of the holders of the bonds at the price of ¥165 and ¥215 per share,
respectively. The conversion prices are subject to adjustments
2009 2010 2010
under specified conditions.
Merchandise and finished goods ¥ 550 ¥ 432 $ 4,643
The following assets were pledged as collateral mainly for secured
Work in progress 41,992 28,689 308,352
long-term debt of ¥15,746 million at March 31, 2009 and ¥15,280
Raw materials and supplies 3,890 3,703 39,800
million ($164,230 thousand) at March 31, 2010:
Total ¥46,432 ¥32,824 $352,795
Thousands of
Inventories for construction contracts expected losses and reserve 2009 2010 2010
for losses on construction contracts were not offset but individually Cash and time deposits ¥ 22 ¥ 21 $ 226
reported. Prepaid expenses and
The corresponding amounts of inventories for the reserve for losses other current assets 595 479 5,148
on construction contracts were ¥511 million ($5,492 thousand) all of Property, plant and
equipment (at net book value) 27,430 21,029 226,021
which represented work in progress.
Investments in nonconsolidated
subsidiaries and affiliates 1,081 1,709 18,368
5. Short-term Loans and Long-term Debt Investments in securities 121 17 183
Short-term loans that represented bank loans bearing average
Long-term loans receivable 106 83 892
interest rates of 1.41 percent and 1.22 percent as of March 31,
Other investments and
2009 and 2010, respectively, were as follows: noncurrent assets 4 4 43
Thousands of Total ¥29,359 ¥23,342 $250,881
2009 2010 2010
Secured (or partly secured) ¥ 2,414 ¥ 2,464 $ 26,483 The aggregate annual maturities of long-term debt outstanding at
Unsecured 11,786 8,482 91,165 March 31, 2010 were as follows:
Total ¥14,200 ¥10,946 $117,648 Thousands of
Year ending March 31, Millions of yen U.S. dollars
2012 ¥19,323 $207,685
Long-term debt at March 31, 2009 and 2010 consisted of the 2013 32,003 343,970
following: 2014 14,427 155,062
Thousands of
2015 3,320 35,684
2009 2010 2010 2016 and thereafter 278 2,988
1.13 percent to 2.88 percent Total ¥69,351 $745,389

loans from banks and other
financial institutions, due
through 2022: 6. Contingent Liabilities
Secured (or partly secured) ¥15,146 ¥14,680 $157,782 Contingent liabilities at March 31, 2009 and 2010 consisted of
Unsecured 40,199 56,402 606,212 the following:
0.00 percent convertible bonds Thousands of
due 2010 16,239 13,678 147,012 Millions of yen U.S. dollars
1.50 percent convertible bonds 2009 2010 2010
due 2012 15,333 15,258 163,994 Export notes receivable
0.57 percent straight bonds discounted ¥ — ¥ 25 $ 269
due 2010 600 200 2,150 Notes receivable endorsed 219 184 1,977
1.15 percent straight bonds Guarantees of bank loans and
due 2011 900 600 6,449 other indebtedness 913 79 849
0.96 to 1.65 percent straight Total ¥1,132 ¥288 $3,095
bonds due 2011
Secured (or partly secured) 600 600 6,449
Unsecured 300 — — 7. Land Revaluation Difference
Others 144 331 3,557 Land for operations was revalued by consolidated subsidiaries
Less current portion included in in accordance with the Land Revaluation Law in the year ended
current liabilities (15,598) (32,398) (348,216) March 31, 2000. The revaluation amount is shown as a separate
Total ¥73,863 ¥69,351 $745,389 component of net assets.
At October 1, 2002, the Company merged with HEC Corporation,
which was a consolidated subsidiary, and succeeded to the land

revaluation difference. financial statements as of March 31, 2010. This type of appro-
The market value of the land was ¥158 million and ¥86 million priation is recognized in the period in which it is approved by the
($924 thousand) lower than the revalued book amount at March 31, shareholders.
2009 and 2010, respectively.
9. Provision for Losses on Construction Contracts
8. Net Assets Included in Cost of Sales
Under the Japanese Corporation Law (“the law”) and regulations, Provision for losses on construction contracts included in cost of
the entire amount paid for new shares is required to be designated sales for the year ended March 31, 2010 was ¥3,482 million ($37,425
as common stock. However, a company may, by a resolution of the thousand).
Board of Directors, designate an amount not exceeding one-half of
the price of the new shares as additional paid-in-capital, which is 10. Gain on Sale of Property
included in capital surplus. Gain on sale of property for the year ended March 31, 2009
In cases where dividend distribution of surplus is made, the resulted from the sale of a portion of the land of the Kanagawa
smaller of an amount equal to 10% of the dividend or the excess, works and the Kawachinagano Company Housing.
if any, of 25% of common stock over the total of additional paid-in-
capital and legal earnings reserve must be set aside as additional 11. Reversal of Allowance for Losses from Lawsuits
paid-in-capital or legal earnings reserve. Legal earnings reserve is Reversal of allowance for losses from lawsuits resulted from
included in retained earnings in the accompanying consolidated the settlement of pending citizens’ lawsuits in connection with the
balance sheets. construction of waste incineration plants.
Additional paid-in-capital and legal earnings reserve may not be
distributed as dividends. However, all additional paid-in-capital and 12. Provision for Allowance for Losses from Lawsuits
all legal earnings reserve may be transferred to other capital surplus Provision for allowance for losses from lawsuits for the year
and retained earnings, respectively, which are potentially available ended March 31, 2009 was recorded based on the estimation of
for dividends. surcharges for violation of the antitrust law and the indemnity and
The maximum amount that the Company can distribute as dividends interest arising from citizens’ lawsuits in connection with the con-
is calculated based on the nonconsolidated financial statements of struction of waste incineration plants.
the Company in accordance with Japanese laws and regulations. Provision for allowance for losses from lawsuits for the year ended
At the annual shareholders’ meeting held on June 25, 2010, the March 31, 2010 was recorded based on the estimation of the
shareholders approved cash dividends of ¥1,588 million ($17,068 indemnity and interest arising from citizens’ and purchasers’ lawsuits
thousand). The appropriation has not been accrued in the consolidated in connection with the construction of waste incineration plants.
13. Impairment Loss

The asset for which the Companies recognized impairment loss in the year ended March 31, 2009 was as follows:
Location Use Type of Assets
V TEX Corporation Tokai Works Mainly production facilities
Land
(Hitachinaka-city, Ibaraki Prefecture) for precision machinery
The Companies grouped their assets based mainly on divisions and works. The Companies also grouped their assets for sale individually.
The Companies reduced the book value of the asset to the recoverable amount and recognized impairment loss of ¥1,096 million because
the V TEX Corporation had been affected by the deteriorating semiconductor market and its orders for a part model of precision machinery
sharply decreased.
Impairment loss was as follows:

Millions of yen
Land
V TEX Corporation Tokai Works ¥1,096
The recoverable amount for the V TEX Corporation Tokai Works was the present value of the expected cash flows from the on-going
utilization and subsequent disposition of the asset using a discount rate of 6%.

14. Treasury Stock At March 31, 2009:
Treasury stock for the years ended March 31, 2009 and 2010 Millions of yen
consisted of the following: Original lease Payments Payments

obligations to date remaining
For the year ended March 31, 2009
Machinery, equipment and vehicles ¥1,863 ¥1,095 ¥768
Number of shares of common stock Thousands
Software 291 157 134
At March 31, 2008 1,192
Total ¥2,154 ¥1,252 ¥902
Increase 285
Decrease (28)
At March 31, 2009 1,449 At March 31, 2010:
Millions of yen
Original lease Payments Payments
For the year ended March 31, 2010 obligations to date remaining
Number of shares of common stock Thousands Machinery, equipment and vehicles ¥1,459 ¥ 978 ¥481
At March 31, 2009 1,449 Software 254 167 87
Increase 642 Total ¥1,713 ¥1,145 ¥568
Decrease (10)
At March 31, 2010 2,081
At March 31, 2010:
15. Cash Flow Information Original lease Payments Payments
Cash and cash equivalents in the consolidated statements of cash obligations to date remaining
flows, and cash and time deposits in the consolidated balance sheets Machinery, equipment and vehicles $15,681 $10,511 $5,170
at March 31, 2009 and 2010 were reconciled as follows: Software 2,730 1,795 935
Thousands of Total $18,411 $12,306 $6,105
2009 2010 2010
Cash and time deposits in Lease payments for the above finance leases for the years ended
the balance sheets ¥51,306 ¥55,826 $600,021 March 31, 2009 and 2010 were ¥383 million and ¥334 million
Time deposits with maturities ($3,590 thousand), respectively.
over three months (1,211) (4,136) (44,454)
Cash and cash equivalents in
cash flow statements ¥50,095 ¥51,690 $555,567 Future minimum payments, including finance charges, for finance
leases at March 31, 2009 and 2010 were as follows:
Thousands of
16. Lease Information Millions of yen U.S. dollars
a) Finance leases as lessee 2009 2010 2010
Finance leases which do not transfer ownership and do not have Payments due within one year ¥327 ¥267 $2,870
bargain purchase provisions at March 31, 2009 and 2010 consisted Payments due after one year 642 353 3,794
of leases for productive facilities for the machinery and process Total ¥969 ¥620 $6,664
equipment segment (machinery, equipment and vehicles) and
software.
b) Operating leases as lessee
Depreciation was as described in Note 2 i), “Significant Accounting
Future minimum payments for operating leases at March 31,
Policies-Depreciation and Amortization”.
2009 and 2010 were as follows:
Thousands of
Finance leases commencing prior to April 1, 2008 which do not Millions of yen U.S. dollars
transfer ownership and do not have bargain purchase provisions 2009 2010 2010
are accounted for in the same method as operating leases under Payments due within one year ¥ 36 ¥ 40 $ 430
Japanese GAAP. Payments due after one year 83 235 2,526
The original lease obligations, the payments to date, and the pay- Total ¥119 ¥275 $2,956
ments remaining for assets which were leased from other parties as
of March 31, 2009 and 2010 were as follows:

c) Finance leases as lessor 17. Financial Instruments
Lease investment assets a) Articles concerning status of financial instruments
Current assets as of March 31, 2009 and 2010 were as follows: (1) Policies for financial instruments
Thousands of The Companies raise necessary funds for capital investment and
2009 2010 2010
research and development plans mainly through bank loans and
the issuance of corporate bonds. The Companies invest temporary
Lease payments receivables ¥171 ¥147 $1,580
surplus funds in highly-secure financial assets, and obtain working
Interest (10) (8) (86)
capital mainly through bank loans. The Companies utilize derivative
Total ¥161 ¥139 $1,494
financial instruments not for speculation but for hedging purposes
only.
Lease investment assets receivables after March 31, 2009 and
2010 were as follows: (2) Substances and risks of financial instruments
Thousands of Trade and other receivables are exposed to credit risks of custom-
ers. Since the Companies operate internationally, foreign currency
2009 2010 2010
net cash inflows are exposed to currency fluctuation risks. Forward
Within one year ¥55 ¥53 $570
foreign exchange contracts are used principally to hedge these risks.
Over one year but within two years 46 44 473
Securities and investment securities, mainly held-to-maturity debt
Over two years but within three years 37 34 365
securities and the securities of companies with which the Companies
Over three years but within four years 26 13 140
have business relationships, are exposed to market fluctuation risks.
Over four years but within five years 7 3 32
The Companies have long-term loans with the companies with
Over five years 0 — —
which the Companies have business relationships.
Almost of the trade payables are due within six months. Foreign
For some consolidated subsidiaries, finance leases commencing currency trade payables are exposed to currency fluctuation risks,
prior to April 1, 2008 which do not transfer ownership and do not but these trade payables are controlled not to exceed the cash
have bargain purchase provisions are accounted for in the same inflows of the same foreign currencies.
method as operating leases under Japanese GAAP. Loans and corporate bonds are mainly for the purpose of raising
funds for capital investment and research and development plans.
Lease payments for finance leases received for the year ended The longest due date is 12 years after fiscal year end. Some of the
March 31, 2009 were ¥3 million. items are exposed to interest rate fluctuation risks.
Depreciation for the years ended March 31, 2009 was ¥2 million. Derivative transactions consist of forward foreign exchange
contracts and currency option contracts made for the purpose of
Future minimum payments to be received, including finance hedging currency fluctuation risks arising from foreign currency
charges, for finance leases at March 31, 2009 and 2010 were as receivables and payables and interest rate swap contracts for
follows: the purpose of hedging interest rate fluctuation risks arising from
Thousands of long-term loans. As to the hedging derivative financial instruments
used and items hedged, hedging policy and the method of evalu-
2009 2010 2010
ating hedge effectiveness are described in Note 2 g), “Significant
Payments due within one year ¥17 ¥17 $183
Accounting Policies-Derivatives and Hedge Accounting”.
Payments due after one year 63 46 494
Total ¥80 ¥63 $677
(3) Managing of financial instruments
i) Management of credit risks (risk of customers’ default)
The remaining book values of future minimum payments to be The financial department of the Company is subject to internal
received concerning a sublet lease transaction at March 31, 2009 regulations for the management of trade receivables and long-term
and 2010 were ¥80 million and ¥63 million ($677 thousand), loans. To reduce the risk of default associated with these instru-
respectively. Of the future minimum payments at March 31, 2009 ments, the Company endeavors to research credit standing, moni-
and 2010, those payments due within one year amounted to ¥17 tor the dues and balances by customer at regular intervals through
million and ¥17 million ($183 thousand), respectively. each sales and business administration division of each department
The remaining book values of future minimum payments as les- and recognize early signs of deterioration in the financial status of
see at March 31, 2009 and 2010 were almost the same and were its customers. The consolidated subsidiaries are subject to internal
included in the above table of finance leases as lessee. regulations for similar management.

Held-to-maturity debt securities are limited to top-ranked securi- b) Articles concerning fair value of financial instruments
ties so as to minimize credit risks. Consolidated balance sheet amounts and fair values of financial
As to derivative transactions, the Companies deal solely with instruments, and the difference between for the year ended March
financial institutions raised funds and top-ranked financial institu- 31, 2010 were as follows. Financial instruments in which the fair
tions to reduce credit risks. value was considered to be extremely difficult to determine were not
included in the list below.
ii) Management of market risks (risks of exchange rate or
interest rate fluctuation) Millions of yen
The Company and some consolidated subsidiaries mainly utilize Book value Fair value Difference
forward foreign exchange contracts and currency option contracts (1) Cash and time deposits ¥ 55,826 ¥ 55,826 ¥ —
for the purpose of hedging currency fluctuation risks arising from (2) Trade notes and accounts 91,590
foreign currency receivables and payables and prospective trans- Allowance for doubtful
receivables *1 (321)
actions that are highly expected to occur, which are categorized
91,269 91,250 (19)
by the type of currency and the monthly due date. The Company
(3) Securities and
utilizes interest rate swap contracts for the purpose of hedging investment securities 5,294 4,925 (369)
interest rate fluctuation risks arising from long-term loans. Some (4) Long-term loans receivable 109
consolidated subsidiaries utilize currency swap contracts for the Allowance for doubtful
purpose of hedging currency fluctuation risks arising from foreign receivables *1 (7)
currency payables from the continuous import of materials. 102 98 (4)
As to securities and investment securities, the Companies endeavor Total assets ¥ 152,491 ¥ 152,099 ¥ (392)
to regularly monitor fair market value and evaluate the financial sta- (1) Notes and accounts payable (53,122) (53,122) —
tus of issuing companies that are important customers. For other (2) Short-term loans (10,946) (10,946) —
than held-to-maturity debt securities, the Companies continuously (3) Current portion of long-term debt (32,398) (32,667) (269)
examine whether the holding position is proper or not while taking (4) Accrued expenses (28,601) (28,601) —
relationships with the issuing companies into consideration. (5) Accrued income taxes (882) (882) —
As to derivative transactions, the Company is subject to internal (6) Long-term debt,
regulations to administer derivative transactions that provide for less current portion (69,020) (69,820) (800)
trading authority and limit maximum amounts, and approves basic Total liabilities ¥(194,969) ¥(196,038) ¥(1,069)
policies annually at its management strategy conference. The Derivative transactions *2

Company’s financial department engages in transactions, records Derivative transactions for which
hedge accounting has not been
them, and monitors the balances. The results of the transactions applied 34 34 —
are reported regularly in its management strategy conference. The Derivative transactions for which
consolidated subsidiaries manage derivatives in a similar way. hedge accounting has been
applied (598) (598) —
Total derivative transactions ¥ (564) ¥ (564) ¥ —
iii) Management of liquidity risks of raising funds (risk of default)
The financial department of the Company makes finance plans *1 Allowance for doubtful receivables was deducted from trade
and updates them based on finance reports from each department. notes and accounts and long-term loans receivable.
The consolidated subsidiaries manage in a similar way. *2 Liabilities were indicated in parenthesis ( ). Assets and liabilities
arising from derivative transactions were offset and indicated by
(4) Supplementary explanation about fair value of financial instruments parenthesis ( ) when the offset amount was a liability.
Fair values of financial instruments include not only fair market
values based on market prices but also reasonably estimated values
if market prices are not available. Reasonably estimated fair values
may fluctuate because the values depend on estimations based on
certain variable assumptions. The contract amounts of derivative
transactions of following Note 18, “Derivative Transactions”, do not
show the market risks of the derivatives.

Thousands of U.S. dollars (3) Securities and investment securities
Book value Fair value Difference Fair value was based on the market prices on the stock
(1) Cash and time deposits $ 600,021 $ 600,021 $ — exchange for equity instruments, and on the prices obtained from
(2) Trade notes and accounts 984,415 the financial institutions for certain debt instruments. Securities
Allowance for doubtful by intent for which they are held were summarized in the table of
receivables *1 (3,450)
Note 3, “Securities”.
980,965 980,761 (204)
(4) Long-term loans receivable
(3) Securities and
investment securities 56,900 52,934 (3,966) The fair value of these accounts was stated at the present value
(4) Long-term loans receivable 1,172 using future cash flows discounted by the premium-added rate on
Allowance for doubtful the proper index such as the yield on the government bonds.
receivables *1 (75)
1,097 1,054 (43) Liabilities
Total assets $ 1,638,983 $ 1,634,770 $ (4,213) (1) Notes and accounts payable, (2) Short-term loans, (4) Accrued
(1) Notes and accounts payable (570,959) (570,959) — expenses and (5) Accrued income taxes
(2) Short-term loans (117,648) (117,648) — These instruments were settled within the short-term and fair
(3) Current portion of long-term debt (348,216) (351,107) (2,891) value was roughly equal to book value. Therefore, the fair value
(4) Accrued expenses (307,405) (307,405) — was stated at book value.
(5) Accrued income taxes (9,480) (9,480) — (3) Current portion of long-term debt and (6) Long-term debt, less
(6) Long-term debt, current portion
less current portion (741,832) (750,430) (8,598)
The fair value of bonds consist of both fair value based on fair
Total liabilities $(2,095,540) $(2,107,029) $(11,489)
market value and the present value using the total amount of the
Derivative transactions *2
principal and interest discounted by the interest rate that reflected
Derivative transactions for which
hedge accounting has not been the bond’s remaining period and the credit risks.
applied 365 365 — The fair value of loans was stated at the present value using the
Derivative transactions for which total amount of the principal and interest discounted by the inter-
hedge accounting has been
applied (6,427) (6,427) — est rate as if the loans would be newly executed.
Total derivative transactions $ (6,062) $ (6,062) $ —
Derivative transactions
*1 Allowance for doubtful receivables was deducted from trade See Note 18, “Derivative Transactions”.
notes and accounts and long-term loans receivable.
*2 Liabilities were indicated in parenthesis ( ). Assets and liabilities Note 2. Financial instruments in which the fair value was considered
arising from derivative transactions were offset and indicated by to be extremely difficult to determine were as follows:
parenthesis ( ) when the offset amount was a liability. Thousands of
Note 1. Articles concerning the calculation method for fair value, 2010 2010
marketable securities and derivative transactions Stock of consolidated subsidiaries

and affiliates ¥11,565 $124,301
Assets
Non-listed equity securities, etc. 3,772 40,542
(1) Cash and time deposits
These instruments were settled within the short-term and fair
value was roughly equal to book value. Therefore, the fair value As to these financial instruments, there was no available fair mar-
was stated at book value. ket price and it was considered to be extremely difficult to determine
(2) Trade notes and accounts fair value, so these financial instruments were not included in “(3)
For the instruments settled within the short-term, fair value was Securities and investment securities”.
roughly equal to book value. Therefore, the fair value was stated
at book value. For the instruments settled over the long-term,
fair value was stated at the present value using future cash flows
discounted by the premium-added rate on the proper index such
as the yield on the government bonds.

Note 3. The expected redemption amount of monetary credit and securities with a maturity date after the consolidated fiscal year-end were
as follows:
Millions of yen
Over one year Over five years
Within one year but within five years but within ten years Over ten years
Cash and time deposits ¥ 55,826 ¥ — ¥— ¥ —
Trade notes and accounts 91,120 470 — —
Securities and investment securities
Held-to-maturity debt securities
(1) Government bonds — 4 1 860
(2) Others — — 20 —
Available-for-sale securities with maturities
(1) Others 7 35 19 —
Long-term loans receivable — 58 39 12
Total ¥146,953 ¥567 ¥79 ¥872

Over one year Over five years
Within one year but within five years but within ten years Over ten years
Cash and time deposits $ 600,021 $ — $ — $ —
Trade notes and accounts 979,364 5,052 — —
Securities and investment securities
Held-to-maturity debt securities
(1) Government bonds — 43 11 9,243
(2) Others — — 215 —
Available-for-sale securities with maturities
(1) Others 75 376 204 —
Long-term loans receivable — 623 419 129
Total $1,579,460 $6,094 $849 $9,372
Note 4. The expected redemption amount of bonds, long-term debt after the consolidated fiscal year-end are described in Note 5 “Short-
term Loans and Long-term Debt”.
Effective from the year ended March 31, 2010, the Companies adopted the new accounting standard, “Accounting Standard for Financial
Instruments” (Statement No. 10 issued by the Accounting Standards Board of Japan on March 10, 2008) and “Implementation guidance on
Disclosures about Fair Value of Financial instruments” (Guidance No. 19 issued by the Accounting Standards Board of Japan on March 10,
2008).

18. Derivative Transactions The following tables summarize market value information as
The Companies enter into forward foreign exchange and interest of March 31, 2010 for derivative transactions for which hedge
swap contracts. Forward foreign exchange contracts are used to accounting had not been applied.
reduce the risk of fluctuations in future foreign currency exchange
rates with respect to the difference between the foreign trade order a) Currency related derivatives
balances and the future payments for foreign procurement. Interest At March 31, 2010:
swap contracts are used to avoid the risk of rising interest rates. Millions of yen
Notional Over one Market Unrealized
amount year value gain (loss)
The following tables summarize market value information as
Forward foreign
of March 31, 2009 for derivative transactions for which hedge exchange contracts:
accounting had not been applied. Type of contracts:
Sell
At March 31, 2009: U.S. dollars ¥652 ¥— ¥47 ¥47
Millions of yen Purchase
U.S. dollars 90 — 3 3
Euro 52 — (1) (1)
Forward foreign
exchange contracts: Currency swap contracts:
Type of contracts: Type of contracts:
Sell Purchase
U.S. dollars ¥ 795 ¥— ¥ 781 ¥ 14 U.S. dollars 160 93 (15) (15)
Euro 189 — 194 (5) Total ¥954 ¥93 ¥34 ¥34
Purchase
Note. The market value of forward foreign exchange contracts is
U.S. dollars 272 — 297 25
calculated using the forward exchange rate. The market value
Euro 401 — 338 (63)
of currency swap contracts is calculated based on the prices
Total ¥1,657 ¥— ¥1,610 ¥(29)
provided by the financial institutions.
calculated using the forward exchange rate.
At March 31, 2010:
Forward foreign
exchange contracts:
Type of contracts:
Sell
U.S. dollars $ 7,008 $ — $505 $505
Purchase
U.S. dollars 967 — 32 32
Euro 559 — (11) (11)
Currency swap contracts:
Type of contracts:
Purchase
U.S. dollars 1,720 1,000 (161) (161)
Total $10,254 $1,000 $365 $365

calculated using the forward exchange rate. The market value
of currency swap contracts is calculated based on the prices
provided by the financial institutions.

The following tables summarize market value information as Thousands of U.S. dollars
of March 31, 2010 for derivative transactions for which hedge Notional Over one Unrealized
Hedged items amount year gain (loss)
accounting had been applied.
Basic treatment:
Forward foreign
a) Currency related derivatives exchange contracts:
At March 31, 2010: Type of contracts:
Millions of yen Sell
Notional Over one Unrealized U.S. dollars Trade receivable $ 72,560 $ — $ 935
Hedged items amount year gain (loss)
Euro Trade receivable 312 — 11
Basic treatment: Purchase
Forward foreign U.S. dollars Trade payable 20,991 20,228 (3,375)
exchange contracts:
Euro Trade payable 39,499 — (3,987)
Type of contracts:
GBP Trade payable 645 — (11)
Sell
Alternative treatment *2:
U.S. dollars Trade receivable ¥ 6,751 ¥ — ¥ 87
Forward foreign
Euro Trade receivable 29 — 1
exchange contracts:
Purchase
Type of contracts:
U.S. dollars Trade payable 1,953 1,882 (314)
Sell
Euro Trade payable 3,675 — (371)
U.S. dollars Trade receivable 30,266 — —
GBP Trade payable 60 — (1)
GBP Trade receivable 54 — —
Alternative treatment *2:
Purchase
Forward foreign Euro Trade payable 3,418 — —
exchange contracts:
Type of contracts: Total $167,745 $20,228 $(6,427)
Sell
U.S. dollars Trade receivable 2,816 — — *1 The market value of forward foreign exchange contracts is calculated based on
GBP Trade receivable 5 — — the prices provided by the financial institutions.
Purchase *2 For certain trade receivables and trade payables denominated in foreign
Euro Trade payable 318 — — currencies for which forward foreign exchange contracts are used to hedge
the foreign currency fluctuation risks, the fair value of the derivative financial
Total ¥15,607 ¥1,882 ¥(598)
instruments is included in the fair value of the trade receivables and trade
payables as hedged items.
*1 The market value of forward foreign exchange contracts is calculated based on
the prices provided by the financial institutions.
*2 For certain trade receivables and trade payables denominated in foreign b) Interest related derivatives
currencies for which forward foreign exchange contracts are used to hedge At March 31, 2010:
the foreign currency fluctuation risks, the fair value of the derivative financial Millions of yen
instruments is included in the fair value of the trade receivables and trade Hedged Notional Over one Market
Exceptional treatment:
payables as hedged items. items amount year value
Interest rate swap
contracts:
Receive float, Long-term
pay fixed loans ¥20,072 ¥15,194 ¥—
Exceptional treatment: Hedged Notional Over one Market

items amount year value
Interest rate swap
contracts:
Receive float, Long-term
pay fixed loans $215,735 $163,306 $—
Note. As interest rate swap contracts subject to exceptional treat-

ment for interest rate swap contracts are accounted for as
a single item with the underlying long-term debt, which are
hedged items, their market value is included in that of the
long-term debt.

19. Severance and Retirement Benefits For the year ended March 31, 2010, the Companies made
The Companies provide post-employment benefit plans, includ- contributions to the defined contribution pension plans in the
ing unfunded lump-sum payment plans, under which all eligible amount of ¥755 million ($8,115 thousand), which were recog-
employees are entitled to benefits based on the level of wages and nized in expenses but were not included in the above table.
salaries at the time of retirement or termination, length of service
and certain other factors. Some consolidated subsidiaries provide Assumptions used in accounting for the retirement benefit plans
funded noncontributory pension plans in addition to unfunded for the years ended March 31, 2009 and 2010 were as follows:
lump-sum payment plans. The Company and some consolidated
subsidiaries provide defined contribution pension plans in addition 2009 2010
to defined benefit pension plans. Method of attributing benefits

to periods of service Straight–line method Straight–line method
The Companies occasionally make additional payments to
Discount rate 1.5% to 2.5% 1.5% to 2.5%
employees for special retirement benefits.
Long-term rate of
return on fund assets 1.0% to 2.5 % 0.0%
The following table sets forth the composition of the liabilities Amortization period for
actuarial differences
recorded in the balance sheets for the Companies’ retirement plans (within the remaining average 5 to 12 years 5 to 12 years
at March 31, 2009 and 2010. term of employees’ service)
Thousands of
2009 2010 2010 20. Income Taxes
Projected benefit obligation ¥14,566 ¥14,913 $160,286 The Companies are subject to a number of income taxes which,
Less fair value of pension assets (5,373) (5,857) (62,951) in the aggregate, indicate a statutory rate in Japan of approximately
Funded status: 40.6% for both the years ended March 31, 2009 and 2010.
Benefit obligation in excess of
plan assets 9,193 9,056 97,335 The significant differences between the statutory tax rate and the
Unrecognized actuarial Companies’ effective tax rate for financial statement purposes for the
differences (2,406) (1,708) (18,358)
years ended March 31, 2009 and 2010 were as follows:
Total 6,787 7,348 78,977
Deferred benefit expenses 156 83 892
2009 2010
Retirement and severance
benefits in the consolidated Statutory tax rate 40.6% 40.6%
balance sheets ¥ 6,943 ¥ 7,431 $ 79,869 Nondeductible expenses (0.2) 0.2
Nontaxable dividend income (32.6) (5.0)
Note: Some consolidated subsidiaries have adopted the allowed
alternative treatment of the accounting standards for retire- Fluctuation in deferred tax assets
valuation allowance account 3.2 (6.8)
ment benefits for small business entities.
Elimination of dividend income 34.7 5.7
Equity in net income of nonconsolidated
Severance and pension costs of the Companies included the fol- subsidiaries and affiliates (1.5) (15.2)
lowing components for the years ended March 31, 2009 and 2010. Other 1.0 4.0
Thousands of Effective tax rate 45.2% 23.5%
2009 2010 2010
Service cost —
benefits earned during the year ¥1,761 ¥1,560 $16,767
Interest cost on
projected benefit obligation 223 247 2,655
Expected return on plan assets (96) — —
Amortization of
actuarial differences 262 504 5,417
Severance and
retirement benefit expenses ¥2,150 ¥2,311 $24,839
Note: Contributions of employees to the funded pension plans are

not included in service cost.
For the year ended March 31, 2009, the Companies made
additional payments for retirement benefits in the amount of ¥6
million and contributions to the defined contribution pension
plans in the amount of ¥668 million, which were recognized in
expenses but were not included in the above table.

Significant components of the Companies’ deferred tax assets and 21. Investment and Rental Property
liabilities as of March 31, 2009 and 2010 were as follows: The Company and some consolidated subsidiaries own rental
property and idle lands in Osaka and other areas. Rental income
Thousands of was ¥726 million ($7,803 thousand) for the year ended March 31,
2009 2010 2010
2010 (Rental income and rental expenses were counterbalanced and
Deferred tax assets:
described mainly in other income and expenses).
Tax loss carryforwards ¥ 9,778 ¥10,617 $114,112
Book value of investment and rental property stated in the consoli-
Impairment loss 6,817 7,289 78,343
dated balance sheet, the relative increase or decrease for this fiscal
Employees’ retirement benefits 2,927 3,239 34,813
year and corresponding fair value were as follows:
Loss from lawsuits 3,659 2,829 30,407
Research and
development expenses 582 658 7,072 Millions of yen
Loss on devaluation of Book value Fair value
securities 228 441 4,740 Year ended Increase or Year ended Year ended
Allowance for doubtful March 31, 2009 decrease March 31, 2010 March 31, 2010
receivables 1,275 432 4,643 ¥27,410 ¥(93) ¥27,317 ¥26,647
Other reserves 5,274 5,290 56,857
Other 2,309 2,481 26,666
Total deferred tax assets 32,849 33,276 357,653
Book value Fair value
Valuation allowance (25,552) (27,270) (293,100)
Year ended Increase or Year ended March Year ended
Deferred tax assets, net 7,297 6,006 64,553 March 31, 2009 decrease 31, 2010 March 31, 2010
Deferred tax liabilities: $294,604 $(999) $293,605 $286,404
Land valuation difference (1,693) (1,532) (16,466)
Reserve for compressed entry (758) (746) (8,018)
Note: Book value stated in the consolidated balance sheet was net of
Reserve for replacement of
property (145) (140) (1,505) accumulated depreciation.
Net unrealized holding Within the movement of rental property in this fiscal year, an
gains on securities (6) (34) (365) increase in rental property by ¥246 million ($2,644 thousand)
Other (2) (3) (32) resulted mainly from acquisition of property, and a decrease
Total deferred tax liabilities (2,604) (2,455) (26,386) in rental property by ¥224 million ($2,408 thousand) resulted
Net deferred tax assets ¥ 4,693 ¥ 3,551 $ 38,167 mainly from depreciation.
The fair values of major property at the end of the fiscal year
were measured based on values in the appraisal report pre-
Net deferred tax assets were included in the consolidated balance
pared by external real estate appraisers.
sheets as follows:
The fair values of other property were measured based on
Thousands of certain assessed values, or indicators which could be consid-
Millions of yen U.S. dollars ered to be properly reflected in the market price.
2009 2010 2010
Current assets ¥4,482 ¥4,138 $44,476 Effective from the year ended March 31, 2010, the Companies
Investments and other
noncurrent assets 1,774 1,136 12,210
Disclosures about Fair Value of Investment and Rental Property”
Long-term liabilities (1,563) (1,723) (18,519)
(Statement No. 20 issued by the Accounting Standards Board of
Net deferred tax assets ¥4,693 ¥3,551 $38,167
Japan on November 28, 2008) and “Implementation guidance on
Accounting Standard for Disclosures about Fair Value of Investment
and Rental Property” (Guidance No. 23 issued by the Accounting
Standards Board of Japan on November 28, 2008).

22. Segment Information
The Companies’ operations are classified into four business segments as follows:
Operations in the environmental systems and industrial plants segment include the production of refuse incineration plants and industrial
plants.
Operations in the machinery and process equipment segment include the production of iron and steel manufacturing machinery, pressing
machinery, diesel engines, turbines, boilers, plant equipment and precision machinery.
Operations in the steel structures and construction machinery segment include bridge construction, water gates, and shield tunneling
machines.
Operations in the other businesses segment include the production of electronic equipment and high-precision positioning information
systems.
Information by business segment of the Companies was as follows:
Millions of yen
2009
Environmental Machinery Steel structures Eliminations
systems and and process and construction Other and
industrial plants equipment machinery businesses Total corporate Consolidated
Net Sales
Outside customers ¥120,731 ¥109,234 ¥30,113 ¥38,527 ¥298,605 ¥ — ¥298,605
Intersegment 1,694 34 347 3,654 5,729 (5,729) —
Total 122,425 109,268 30,460 42,181 304,334 (5,729) 298,605
Cost and expenses 120,238 100,324 31,777 40,287 292,626 (5,699) 286,927
Operating income (loss) ¥ 2,187 ¥ 8,944 ¥ (1,317) ¥ 1,894 ¥ 11,708 ¥ (30) ¥ 11,678
Assets ¥ 89,151 ¥124,254 ¥40,272 ¥47,396 ¥301,073 ¥66,400 ¥367,473
Depreciation ¥ 1,076 ¥ 4,772 ¥ 406 ¥ 949 ¥ 7,203 ¥ 435 ¥ 7,638
Impairment loss ¥ — ¥ 1,096 ¥ — ¥ — ¥ 1,096 ¥ — ¥ 1,096
Capital expenditure ¥ 760 ¥ 11,261 ¥ 737 ¥ 1,515 ¥ 14,273 ¥ 171 ¥ 14,444
Millions of yen
2010
Net Sales
Outside customers ¥115,442 ¥ 93,401 ¥31,883 ¥32,800 ¥273,526 ¥ — ¥273,526
Intersegment 301 833 412 3,124 4,670 (4,670) —
Total 115,743 94,234 32,295 35,924 278,196 (4,670) 273,526
Cost and expenses 110,255 86,923 31,871 35,541 264,590 (4,621) 259,969
Operating income (loss) ¥ 5,488 ¥ 7,311 ¥ 424 ¥ 383 ¥ 13,606 ¥ (49) ¥ 13,557
Assets ¥ 78,164 ¥112,646 ¥40,483 ¥59,200 ¥290,493 ¥58,838 ¥349,331
Depreciation ¥ 798 ¥ 5,404 ¥ 1,259 ¥ 1,007 ¥ 8,468 ¥ 12 ¥ 8,480
Capital expenditure ¥ 948 ¥ 3,671 ¥ 1,750 ¥ 832 ¥ 7,201 ¥ 1 ¥ 7,202

2010
Net Sales
Outside customers $1,240,778 $1,003,880 $342,680 $352,537 $2,939,875 $ — $2,939,875
Intersegment 3,235 8,953 4,428 33,577 50,193 (50,193) —
Total 1,244,013 1,012,833 347,108 386,114 2,990,068 (50,193) 2,939,875
Cost and expenses 1,185,028 934,254 342,551 381,997 2,843,830 (49,667) 2,794,163
Operating income (loss) $ 58,985 $ 78,579 $ 4,557 $ 4,117 $ 146,238 $ (526) $ 145,712
Assets $ 840,112 $1,210,727 $435,114 $636,285 $3,122,238 $632,394 $3,754,632
Depreciation $ 8,577 $ 58,083 $ 13,532 $ 10,823 $ 91,015 $ 129 $ 91,144
Capital expenditure $ 10,189 $ 39,456 $ 18,809 $ 8,943 $ 77,397 $ 11 $ 77,408
Corporate amounts are mainly the common accounts of the head office, which cannot be allotted to each segment. Corporate assets,
which include mainly cash, time deposits and securities, at March 31, 2009 and 2010 were ¥66,329 million and ¥58,944 million ($633,534
thousand), respectively.
As described in Note 2 h), “Significant Accounting Policies-Inventories”, effective from the year ended March 31, 2009, the Companies
adopted the standard, “Accounting Standard for Measurement of Inventories” (Statement No. 9 issued by the Accounting Standards Board
of Japan on July 5, 2006). As a result, operating income was ¥3 million less in the environmental systems and industrial plants segment, ¥355
million less in the machinery and process equipment segment and ¥21 million less in the other businesses segment than they would have been
with the previous method, and operating loss was ¥10 million more in the steel structures and construction machinery segment than it would
have been with the previous method.
As described in Note 2 d), “Significant Accounting Policies-Revenue Recognition”, effective from the year ended March 31, 2010, the
Companies adopted the new accounting standard, “Accounting Standard for Construction Contracts” (Statement No. 15 issued by the
Accounting Standards Board of Japan on December 27, 2007) and the implementation guidance “Guidance on Accounting Standard for
Construction Contracts” (Guidance No. 18 issued by the Accounting Standards Board of Japan on December 27, 2007).
As a result, net sales were ¥681 million ($7,319 thousand) more and operating income ¥70 million ($752 thousand) more in the environmen-
tal systems and industrial plants segment, net sales were ¥3,290 million ($35,361 thousand) more and operating income ¥441 million ($4,740
thousand) more in the machinery and process equipment segment, and net sales were ¥2,700 million ($29,020 thousand) more and operating
income ¥266 million ($2,859 thousand) more in the steel structures and construction machinery segment than they would have been with the
previous method.
Geographic segment information is not shown because domestic net sales, including export sales from Japan, for the years ended March 31,
2009 and 2010 and the related assets at March 31, 2009 and 2010 were more than 90% of the respective consolidated net sales and assets.
Overseas sales by region for the years ended March 31, 2009 and 2010 were as follows:
Thousands of
2009 2010 2010
Asia ¥34,499 ¥25,350 $272,463
Central and South America 3,143 1,215 13,059
Europe 3,375 1,247 13,403
Other 8,544 14,961 160,802
Total ¥49,561 ¥42,773 $459,727
Overseas sales include overseas subsidiaries’ sales to overseas third parties as well as the Company’s and domestic subsidiaries’ export
sales to third parties.
Note: The main countries and areas included in each segment were as follows:
Asia Korea, China, Taiwan, Thailand, Singapore, United Arab Emirates, Saudi Arabia, Hong Kong, India and Qatar
Central and South America Brazil
Europe England, France, and Germany
Other America

23. Related Party Information
Year ended March 31, 2009:
Equity
ownership
Nature of by the Relation- Nature of Trading Balance at
Attribute Name Domicile Capitalization operations company ship transaction amount Account year end
Affiliate Naikai Onomichi ¥1,200 Manu- 19.9% Materials Purchase of ¥8,112 Advances ¥3,158
Zosen City, million facturing direct purchase materials million paid million
Corporation Hiroshima 0.4% acceptance
Prefecture indirect
This related party transaction took place on terms similar to those with third parties.
Effective from the year ended March 31, 2009, the Companies adopted the standard, “Accounting Standard for Related Party Disclosures”
(Statement No. 11 issued by the Accounting Standards Board of Japan on October 17, 2006) and the implementation guidance, “Guidance
on Accounting Standard for Related Party Disclosures” (Guidance No. 13 issued by the Accounting Standards Board of Japan on October 17,
2006).
This adoption did not require any changes in disclosure for the year ended March 31, 2009.
The significant affiliate companies were Steel Plantech Corporation and Universal Shipbuilding Corporation for the year ended March 31, 2009.
A summary of the financial statements of the significant affiliates was as follows:

Millions of yen
Total Current assets ¥181,542
Total Fixed assets 82,775
Total Current liabilities 200,249
Total Long-term liabilities 13,513
Total Net assets 50,555
Net sales ¥231,019
Loss before income taxes and minority interests (5,568)
Net loss (3,416)
Year ended March 31, 2010:

Equity
ownership
Nature of by the Relation- Nature of Trading Balance at
Attribute Name Domicile Capitalization operations company ship transaction amount Account year end
Affiliate Naikai Onomichi ¥1,200 Manu- 39.5% Materials Purchase of ¥6,239 Advances ¥1,422
Zosen City, million facturing direct purchase materials million paid million
Corporation Hiroshima ($12,898 0.4% acceptance ($67,057 ($15,284
Prefecture thousand) indirect thousand) thousand)
This related party transaction took place on terms similar to those with third parties.
The significant affiliate companies were Naikai Zosen Corporation, Steel Plantech Corporation and Universal Shipbuilding Corporation for the
year ended March 31, 2010.
A summary of the financial statements of the significant affiliates was as follows:

Millions of yen Thousands of U.S. dollars
Total Current assets ¥146,345 $1,572,926
Total Fixed assets 97,545 1,048,420
Total Current liabilities 149,925 1,611,404
Total Long-term liabilities 19,411 208,631
Total Net assets 74,554 801,311
Net sales ¥395,514 $4,251,010
Income before income taxes and minority interests 34,015 365,595
Net income 20,244 217,584

Group Companies
Head Office Works Overseas offices

7-89, Nanko-kita 1-chome, Suminoe-ku,
Ariake Works Abu Dhabi Office
Osaka 559-8559, Japan
Phone: +81-6-6569-0001 1, Ariake, Nagasu-machi, Tama-gun, Khalifa Street, Bin Hamoodah Tower, 9th floor,
Facsimile: +81-6-6569-0002 Kumamoto 869-0113, Japan 904 P.O. Box203, Abu Dhabi,
Phone: +81-968-78-2155 United Arab Emirates
Tokyo Head Office Facsimile: +81-968-78-7031 Phone: +971-2-6276-180
15th Floor, Omori Bellport D-Wing Facsimile: +971-2-6276-181
Mukaishima Works
26-3, Minami-Ohi 6-chome, Shinagawa-ku,
14755, Mukaihigashi-cho, Onomichi, Taipei Office
Tokyo 140-0013, Japan
Phone: +81-3-6404-0800 Hiroshima 722-8604, Japan Room 902, Chia Hsing Building, 96 Sec. 2,
Facsimile: +81-3-6404-0809 Phone: +81-848-44-1111 Chung Shan N. Rd., Taipei 10449, Taiwan
(Export business departments are situated in Facsimile: +81-848-44-1518 Phone: +886-2-2568-2022
this office) Facsimile: +886-2-2568-2030
Innoshima Works
Business Promotion & Product 2477-16, Innoshimahabu-cho, Onomichi, Shanghai Office
Development Headquarters Hiroshima 722-2323, Japan Room No. 9004, Zhongrong Plaza No. 1088
Phone: +81-845-22-1200 Pudong South Road, Pudong New Area,
2-11, Funamachi 2-chome, Taisho-ku,
Facsimile: +81-845-22-0383 Shanghai 200120, China
Phone: +86-21-6887-2525
Phone: +81-6-6551-9101 Sakai Works Facsimile: +86-21-6887-2838
Facsimile: +81-6-6551-9642 5-1, Chikko-shinmachi 1-cho, Nishi-ku, Sakai,
Osaka 592-8331, Japan Beijing Office
Phone: +81-72-243-6801 Room No. 1417, Beijing Fortune Building,
Domestic offices Facsimile: +81-72-243-6839 5, Dong San Huan Bei Lu, Chao Yang Qu,
Sapporo Office Beijing 100004, China
Chikko Works Phone: +86-10-6590-8481
1-4, Nishi 5-chome, Kita 4-jo, Chuo-ku, 2-11, Funamachi 2-chome, Taisho-ku, Facsimile: +86-10-6590-8483
Sapporo, Hokkaido 060-0004, Japan Osaka 551-0022, Japan
Phone: +81-11-231-2215 Phone: +81-6-6551-2264 Bangkok Office
Facsimile: +81-11-231-2419 Facsimile: +81-6-6551-9642 BB Building 19th Floor Room No. 1911,
Sendai Office 54 Sukhumvit 21 (Asoke) Road,
Maizuru Works Kwaeng Klong Torey Nua, Khet Wattana,
2-21, Chuo 3-chome, Aoba-ku, Sendai, 1180, Amarube-shimo, Maizuru, Bangkok 10110, Thailand
Miyagi 980-0021, Japan Kyoto 625-8501, Japan Phone: +66-2259-4831/4832
Phone: +81-22-712-6066 Phone: +81-773-62-8925 Facsimile: +66-2259-4833
Facsimile: +81-22-712-6070 Facsimile: +81-773-62-8827
Ho Chi Minh City Office
Nagoya Office Ibaraki Works 8th Floor, PDD Building, 162 Pasteur Street,
24-30, Meieki-minami 1-chome, Nakamura-ku, 4, Kogyo-danchi, Hitachi-omiya, District 1, Ho Chi Minh City, Vietnam
Nagoya, Aichi 450-0003, Japan Ibaraki 319-2134, Japan Phone: +84-8-3822-8636
Phone: +81-52-581-0161 Phone: +81-295-53-5730 Facsimile: +84-8-3822-8635
Facsimile: +81-52-581-6371 Facsimile: +81-295-52-4797
Busan Office
Hiroshima Office
Jung Seok Bldg, #1203, 89-14, 4-Ga,
13-14, Nobori-cho, Naka-ku,
Chungang-Dong, Chung-Gu,
Hiroshima 730-0016, Japan
Busan 600-723, Korea
Phone: +81-82-227-1950
Phone: +82-51-464-6796
Facsimile: +81-82-227-1953
Facsimile: +82-51-464-6878
Fukuoka Office
Singapore Office
2-1, Hakata-ekimae 3-chome, Hakata-ku,
41 Science Park Road, #04-08B (Lobby B),
Fukuoka 812-0011, Japan
The Gemini, Singapore Science Park II,
Phone: +81-92-441-1644
Singapore 117610
Facsimile: +81-92-441-1983
Phone: +65-6773-6833
Kumamoto Office Facsimile: +65-6773-6433
7-32, Kamitori-cho,
Kumamoto 860-0845, Japan
Phone: +81-96-324-5107
Facsimile: +81-96-352-8173
Okinawa Office
7-1, Kumoji 1-chome, Naha,
Okinawa 900-0015, Japan
Phone: +81-98-861-1092
Facsimile: +81-98-869-1094

Major overseas subsidiaries NICHIZO TECH INC. ULTRA FINISH TECHNOLOGY CO., LTD.
2-15-26, Tsuru-machi, Taisho-ku, 1-1-1, Heisei-cho, Yokosuka,
HITACHI ZOSEN EUROPE LTD.
Osaka 551-0023, Japan Kanagawa 238-0013, Japan
5th Floor, 107 Cannon Street, Phone: +81-6-6555-7050 Phone: +81-46-828-5050
London EC4N 5AF, U.K. Facsimile: +81-6-6555-7061 Facsimile: +81-46-828-5052
Phone: +44-20-7929-2099 Technical consulting, engineering and Accepting orders for the grinding of
Facsimile: +44-20-7929-1803 maintenance semiconductor manufacturing equipment and
Brokerage and sales of ships, offshore peripheral devices, petrochemistry plants and
equipment, plants, industrial machinery and HITACHI-ZOSEN PLANT medical machinery, etc.
steel structures for overseas markets; acting as TECHNO-SERVICE CORPORATION
an intermediary for the remodeling, repair and 2-6-33, Edobori, Nishi-ku, OHNAMI CORPORATION
chartering of ships Osaka 550-0002, Japan 2-6-33, Edobori, Nishi-ku,
Phone: +81-6-6225-9798 Osaka 550-0002, Japan
Hitachi Zosen U.S.A. Ltd.
Facsimile: +81-6-6225-9771 Phone: +81-6-6445-0073
17th Floor, 2 Grand Central Tower, 140 East Facsimile: +81-6-6445-9431
After-sales service and sale of components
45th Street, New York, NY 10017, U.S.A. Warehousing, port cargo handling, transport,
for plant and equipment; engineering services;
Phone: +1-212-883-9060 construction, packing, custom clearing, car
design of industrial machinery
Facsimile: +1-212-883-9064 maintenance
Brokerage and sales of plants and machinery, HITACHI ZOSEN FUKUI CORPORATION
etc.; conducting surveys and gathering 1-8-28, Jiyugaoka, Awara, SLURRY-21 Co., Ltd.
information on new products and technologies Fukui 919-0695, Japan 6-26-3, Minami-Ohi, Shinagawa-ku,
Phone: +81-776-73-1220 Tokyo 140-0013, Japan
H&N CATALYST MANUFACTURING LLC.
Facsimile: +81-776-73-3055 Phone: +81-3-6404-0136
207 Lonnie E.Crawford Boulevard, Scottsboro, Facsimile: +81-3-3761-6927
Manufacture, sales, and after-sales service of
Alabama 35769, U.S.A. Manufacture, distribution, lease, repair and
press machinery, automation equipment, and
Phone: +1-256-575-0515 maintenance of ice makers and parts
electronical controllers
Facsimile: +1-256-575-0519
Manufacture of NOx removal catalysts IMEX CO., LTD. Universal Shipbuilding Corporation
2293-1, Innoshimahabu-cho, Onomichi, 1310, Omiya-cho, Saiwai-ku, Kawasaki,
Zhenjiang Zhong Chuan Hitachi Zosen
Hiroshima 722-2393, Japan Kanagawa 212-8554, Japan
Machinery Co., Ltd. Phone: +81-44-543-2700
Phone: +81-845-22-6411
250 Guantang Qiao Road, Zhenjiang Jiangsu, Facsimile: +81-845-22-6455 Facsimile: +81-44-543-2710
China Manufacture, installation and repair of boilers, Design, manufacture, sales, and repair of
Phone: +86-511-85338108 diesel engines, and other devices ships; design, manufacture, and sales of steel
Facsimile: +86-511-85338113 structures such as floating petroleum storage
Production and sales of diesel engine NIPPON PUSNES CO., LTD. tanks and “Megafloat” structure
components, parts of various machines, and 2-37-4, Nihombashi-hamacho, Chuo-ku,
steel structures; offering of consulting services Tokyo 103-0007, Japan NAIKAI ZOSEN CORPORATION
regarding related technologies Phone: +81-3-3669-0471 226-6, Sawa, Setoda-cho, Onomichi,
Facsimile: +81-3-3669-7985 Hiroshima 722-2493, Japan
Zhongji Hitachi Zosen Diesel Engine Phone: +81-845-27-2111
Design, manufacture and distribution of marine
Co., Ltd. deck equipment, marine structure and various Facsimile: +81-845-27-2895
Xingang Industrial Base, Economic Development equipment Shipbuilding, repair and dismantling of ships;
Zone, Zhoushan, Zhejiang Province, China manufacture and repair of marine machinery;
Phone: +86-580-6-2015 OCL Corporation hotel management; and other businesses
Facsimile: +86-580-6-2003 2-11-6, Nishi-shimbashi, Minato-ku,
Design, manufacture, sale and after-sales Tokyo 105-0003, Japan JP Steel Plantech Co.
servicing of marine engines, diesel engines for Phone: +81-3-3502-0126 3-1, Kinko-cho, Kanagawa-ku, Yokohama,
power generation, and various equipment for Facsimile: +81-3-3502-0129 Kanagawa 221-0056, Japan
environmental protection purposes Design, manufacture, distribution, maintenance, Phone: +81-45-440-5900
retention and leasing of containers and related- Facsimile: +81-45-440-5841
equipment for transportation, storage, and Distribution and engineering services of iron-
Major subsidiaries waste of radioactive ingredients making facilities
Daiki Ataka Engineering Co., Ltd. V TEX Corporation HITACHI ZOSEN HANDLING SYSTEM
2-16-1, Shimbashi, Minato-ku, 6-28-11, Minami-Ohi, Shinagawa-ku, Co., Ltd.
Tokyo 105-0004, Japan Tokyo 140-0013, Japan 14755, Mukaihigashi-cho, Onomichi,
Phone: +81-3-3503-4335 Phone: +81-3-3765-4167 Hiroshima 722-0062, Japan
Facsimile: +81-3-3501-2108 Facsimile: +81-3-3765-4168 Phone: +81-848-44-1104
Design, construction, production and sale of Manufacture and distribution of valves and Facsimile: +81-848-45-2979
environment protection systems and facilities, rupture discs for high vacuum plants, super- Manufacture, distribution and operation
and industrial equipment high vacuum (semiconductors, liquid-crystal of logistics equipment; technical service,
and radiation facilities) plants, fire power plants, maintenance and steel structure/construction
SN Environment Technology Co., Ltd. nuclear power plants and synthetic plants work and engineering
1-7-89, Nankokita, Suminoe-ku,
Phone: +81-6-6569-7070
Facsimile: +81-6-6569-7080
Design, construction, operation and
maintenance of refuse incineration facilities,
and environment protection facilities, after-sales
service and maintenance of various plants

Company History
Osaka Iron Works (proprietorship, the predecessor 1977 • Construction is completed for 500,000-ton tanker for Esso.
of Hitachi Zosen) era 1979 • Ariake Land Machinery Works starts operations.
1981 • Hitachi Zosen celebrates its 100th anniversary.
1881 • E.H. Hunter, of England, founded the Osaka Iron Works
1987 • The world’s first multiple-face shield tunneling machine is
(proprietorship) on the Ajikawa riverbank, Osaka.
completed.
1882 • The Hatsu Maru (14GT wooden ship), the first new ship, is
1990 • Construction of ultra-large steel mill plants is completed for
constructed.
Baoshan Iron and Steel of China and Sicartsa Steel Mill in
1890 • The Kumagawa Maru, Japan’s first steel-hulled ship, is built Mexico.
for Osaka Shosen (now Mitsui O.S.K. Lines).
1993 • Construction of Japan’s first double hull VLCC is completed.
1900 • Sakurajima Works starts operations (relocated to the Ariake
• Sakai Works starts operation as the specialized plant for
Machinery Works in September 1997).
steel structures.
1907 • The Japan’s first Western-style whaling ship, the No. 2 Hogei
• Slurry-shield tunnel boring machine (with one of the world’s
Maru, is constructed.
largest diameter of 14.14m) is produced.
• Tokyo liaison office is opened.
1994 • The world’s first triple-face shield tunneling machine is
1908 • Japan’s first tanker, the Tora Maru is constructed. completed.
1911 • Innoshima Works starts operations. 1996 • A refuse incineration plant for the Clean Association of
Eastern Saitama District receives MITI (now METI) Minister
prize for excellent environmental equipment.
Old Osaka Iron Works Ltd. era • Electric power supply business is inaugurated.
• Japan’s first super refuse-fired power generation plant comes
1914 • Osaka Iron Works is reorganized as a joint-stock company. on stream.
1922 • Chikko Works starts operations.
1997 • An order is received for the world’s first fifth-generation
1927 • Dojima Ohashi, an arch bridge, and other structures are semisub rig.
completed in succession for the municipal government of • Sakurajima Works is closed, and facilities are transferred to
Osaka. Ariake Works; Ariake Machinery Works starts operations.
1930 • The Heiyo Maru and Heian Maru large-scale cargo and • The first B&W marine diesel engine (74,640 hp) is
passenger ships for Nippon Yusen K.K. are constructed completed (one of the world’s largest).
(these ships established a new record for river launches in
2000 • An order received for the No.1 gasification melting furnace.
Japan).
• Yumemai Ohashi, the world’s first floating swing bridge is
constructed.
New Osaka Iron Works Ltd. era • 8,000 hours of continuous operations are achieved by refuse
incineration plant delivered for Taiwan.
1934 • The Company makes a new start as Osaka Iron Works 2001 • A large-scale desalination plant is constructed in Saudi
incorporated (marking the incorporation of the current Hitachi Arabia.
Zosen Corporation). 2002 • The Basic Agreement on Consolidation of Shipbuilding
1937 • Osaka Tekko, a technical journal, is inaugurated. Operations is concluded with NKK Corp (now JFE Steel
corporation).
• The shipbuilding operation is transferred to Universal
As Hitachi Zosen Corporation Shipbuilding Corporation on October 1.
• The Hitz brand name goes into use as of October 1.
1943 • The name is changed to Hitachi Zosen Corporation. • HEC Corporation is acquired.
• Mukaishima Works starts operations. 2003 • The world’s most advanced electronic control marine engine
1944 • Kanagawa Works starts operations. for large vessels is produced.
1948 • Hitachi Zosen Technical Review is inaugurated. • A desalination plant is constructed for Oman.
1949 • Technical Research Institute is opened. 2004 • An order is received (as member of international consortium)
• The first whaling ship is constructed for Norway following for Stonecutters Bridge — the world’s second-longest cable-
World War II as a result of government trade. stayed bridge — for Hong Kong.
1950 • A technological tie-up for B&W type diesel engines is concluded. • Kyoto Municipal Waste Edible Oil Fuel Production Facility
• An order is received for tanker from customer in United is completed with the greatest manufacturing capacity in
1951
Japan.
States — the first order received under the private trade
program to export a ship after the end of World War II. 2005 • Refuse incineration plant is constructed for Odate City (the
• The first B&W marine diesel engine is completed. first intermediate processing operation of municipal refuse in
Japan under PFI legislation).
1956 • Offices are opened in London and New York.
2006 • A desalination plant is constructed in Abu Dhabi.
1960 • A technological tie-up is concluded with Von Roll
Environmental Technology Ltd. of Switzerland for a De Roll- 2007 • One of Japan’s largest gasification melting furnace is
type refuse incineration plant. completed for Toyoda City.
1965 • A De Roll-type refuse incineration plant is completed for • An order is received from South Africa for one of the world’s
the municipal government of Osaka (the first mechanical largest coal-to-liquids (CTL) reactor.
incineration plant with power generation facility manufactured 2008 • A new factory is constructed in Sakai Works for extension
in Japan). of industrial machinery and shield tunneling machinery
• Sakai Works starts operations. production.
1966 • Sakurajima Works restarts as a specialized plant for land 2009 • Ten Group companies are absorbed.
machinery. • Completed a new plant for manufacture of medium-sized
• A number of orders are completed for De Roll-type refuse diesel engines at Ariake Works.
1969
incineration plants for Tokyo Metropolis. • Launched a joint venture in China for manufacture of marine
diesel engines.
1971 • Maizuru Works starts operations.
2010 • Launched a joint venture in China for manufacture of marine
1972 • Orders are received for two cargo ships for China. deck machinery.
1973 • Ariake Works starts operations.

Investor Information
(As of March 31, 2010)
Corporate data Shareholders information

Date of establishment: April 1, 1881 Business year: April 1 to March 31
Paid-in capital: 45,442,365,005 yen Annual General Meeting of Shareholders: Late June
Number of employees (consolidated): 8,004 Final date for voting right registration: March 31
Number of employees (non-consolidated): 2,867 Dividend record date (term-end): March 31
Consolidated subsidiaries: 61 Dividend record date (interim): September 30
Stock data Public notices:

via Company’s website
Number of shares authorized: 2,000,000,000 http://www.hitachizosen.co.jp/
Number of shares issued: 796,073,282
Share trading unit: 500 shares
Number of shareholders: 122,582
Shareholder registry administrator:
Major shareholders Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Number of
shares held Equity stake* Stock listing: Tokyo Stock Exchange, Osaka Securities Exchange
Name of shareholder (Thousands of shares) (%)
The Master Trust Bank of Japan, Ltd.
(trust account) 35,344 4.5 Distribution of shareholdings
Japan Trustee Services Bank, Ltd. Financial institutions
(trust account) 34,888 4.4 (28.4%)
Citibank Hong Kong PBG Clients
Hong Kong 29,204 3.7
The Bank of Tokyo-Mitsubishi UFJ, Ltd. 24,749 3.1 By shareholder
Sompo Japan Insurance Inc. 13,000 1.6 category
Individuals, etc. (52.4%) Securities firms (2.5%)
Japan Trustee Services Bank, Ltd. Other domestic corporations (4.2%)
(trust account 9) 12,480 1.6
Juniper 9,579 1.2 Non-residents (12.5%)
Trust and Custody Services Bank, Ltd.
(pension trust account) 9,227 1.2 Less than 500 shares (0.3%)
Nippon Life Insurance Company 8,514 1.1 500 shares or more (14.7%)
2.5 million shares or more
Japan Trustee Services Bank, Ltd. (34.7%)
(trust account 1) 6,223 0.8
*Percentage of issued shares excluding treasury shares.

5,000 shares or more By number of
(27.3%)
shares held
500,000 shares or more

50,000 shares or more
(10.2%)
(12.8%)
Share price and trading volume

Share price (in yen, month-end closing prices)
300
150
Trading volume
(million shares)
0 1,000
500
0
Fiscal year 2005 2006 2007 2008 2009
High 273 210 266 150 144
Low 138 107 95 66 80
At year-end 194 206 98 79 137

Hitachi Zosen Corporation
Annual Report 2010
Head Office
7-89, Nanko-kita 1-chome, Suminoe-ku, Osaka 559-8559, Japan
Phone: +81-6-6569-0001 Facsimile: +81-6-6569-0002
Tokyo Head Office

15th Floor, Omori Bellport D-Wing, 26-3, Minami-Ohi 6-chome, Shinagawa-ku,
Tokyo 140-0013, Japan
Phone: +81-3-6404-0800 Facsimile: +81-3-6404-0809
http://www.hitachizosen.co.jp
This report is printed on FSC-certified paper using the waterless printing process and soy ink.
Printed in Japan P5-2010 Sep D&JOIN

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Annual Report 2010

Manufacturing & Engineering

We contribute to a prosperous future by

The year in review

60th Anniversary of Hitachi Zosen

A system for manufacturing

1 Hitachi Zosen Corporation

Construction of industrial waste 05 To Our Stakeholders

Order received for refurbish-

Nov. canisters for storing and transporting

Completion of Japan’s largest

First unit completed after the

Per share data (yen, U.S. dollars)

Hitz Innovation Hitz Innovation II

3 Hitachi Zosen Corporation

Total assets Interest-bearing

19.4 19.3 6.4

153,968 1.4 1.5 1.4

Annual Report 2010 4

The Hitachi Zosen Group began implementing its three-year

Minoru Furukawa, Chairman & President

5 Hitachi Zosen Corporation

Annual Report 2010 6

First, I would like to address a few words to our shareholders on

Q1 How was business performance

7 Hitachi Zosen Corporation

Q 2 How is Hitz Innovation II

1. A stronger financial position

Annual Report 2010 8

same time, we have enhanced their ability to adapt to a changing

Q 4 What are the business performance

9 Hitachi Zosen Corporation

Annual Report 2010 10

For the Earth and for People

Fusion of general engineering technologies

Help enrich the global environment and underpin communities,

11 Hitachi Zosen Corporation

energy Organic light-emitting diodes (OLEDs) are increasingly being used

Maishima Plant in Osaka City

Annual Report 2010 12

Converting sunlight into electricity

Along with wind, geothermal, biomass and other natural energy

Preventing air pollution by SCR

NOx removal catalysts Plant with SCR NOx removal systems

13 Hitachi Zosen Corporation

Turning seawater into fresh water for

Shield tunneling machines are essential for creation of underground

Shield tunneling machine for the Bosphorus

Annual Report 2010 14

2007 2008 2009 2007 2008 2009 2007 2008 2009

Main business lines

Environmental solutions Industrial plants

15 Hitachi Zosen Corporation

Environmental systems Industrial plants

▼ Higashiyodo Plant in Osaka City ▼ Seawater desalination plant

Annual Report 2010 16

Sales ¥93.4 billion by Segment

2007 2008 2009 2007 2008 2009 2007 2008 2009

Main business lines